If a monopoly firm sells to competitive distributors and the distributors have a constant marginal cost of $8 and they are paying the profit- maximizing wholesale price of $20, what is the retail price of the product?
A)$8
B)$28
C)$12
D)$20

Question

Quizplus · Accepted Answer

The retail price would be the sum of the wholesale price ($20) and the constant marginal cost of the distributors ($8), totaling $28.

If a Monopoly Firm Sells to Competitive Distributors and the Distributors