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- Subject
- Oligopolyeconomics-mcqs › oligopoly
- Published
- 30 May 2019
- Last updated
- 28 May 2026
ABC Publishing offers an economics textbook along with a study guide. Raheel values the textbook at Rs 75 and the study guide at Rs 15, while Mariam values the textbook at Rs 60 and the study guide at Rs 25. Assuming the marginal cost of producing both items is zero, what combined price should ABC Publishing set when pricing the textbook and study guide separately to maximize revenue?
Multiple choice question for Oligopoly. Select an option, then review the explanation below.
Explanation
Since the marginal cost of production is zero, ABC Publishing should set prices based on the maximum willingness to pay. Raheel's total willingness to pay is Rs 90 (75 + 15), and Mariam's total is Rs 85 (60 + 25). To maximize revenue when charging separately, the publisher should choose a combined price that both customers can afford. Setting the total price at Rs 75 ensures both customers can purchase, maximizing sales and revenue.
More Oligopoly MCQs
Practice related questions from the same subject.
- 1.Which concept in game theory is commonly used to analyze oligopoly behavior?
- 2.What do many economists believe is the valid reason behind resale price maintenance?
- 3.What happens to the market price as the number of sellers in an oligopoly grows?
- 4.When an oligopolist independently determines its production quantity to maximize profits, how does its output compare to that of a monopoly and a perfectly competitive market?
- 5.If an oligopolist aims to maximize profits and finds that the output effect on the marginal unit is greater than the price effect, what action should the firm take?