Scenario: Tobac Co

Multiple Choice

Scenario: Tobac Co. is a monopolist in cigarette market in Nicotiana Republic, where the U.S. dollar is used as the official currency. The firm faces the demand curve shown below. The firm has a constant marginal cost of $2.00 per pack and a fixed cost of $50 million.

-Refer to the scenario above.If Tobac Co.is forced by the government to charge the fair-return price,the firm's profit would be ________.

A) -$50 million
B) negative but more than -$50 million
C) $0
D) positive but less than $300 million