Asked by Matthew Payeff on Jul 23, 2024
Verified
For a monopolist to sell an output level of 10 units, the price must be $8. MR at this output level will be
A) > $8 and < $16.
B) < $8.
C) = $8.
D) > $16.
MR
Marginal Revenue, which is the increase in revenue resulting from the sale of one additional unit of a product.
Output Level
The amount of output produced by a firm or an industry within a certain period.
- Calculate changes in total revenue resulting from price changes in a monopolistic market.
- Understand the impact of price cuts or increases on a monopolist's revenue depending on the elasticity of demand.
Verified Answer
MW
matilda wataiJul 29, 2024
Final Answer :
B
Explanation :
For a monopolist, the marginal revenue (MR) is always less than the price due to the downward sloping demand curve. Selling an additional unit requires lowering the price for all units sold, which makes MR less than the price.
Learning Objectives
- Calculate changes in total revenue resulting from price changes in a monopolistic market.
- Understand the impact of price cuts or increases on a monopolist's revenue depending on the elasticity of demand.