Asked by Brayan Checo Rosario on Jun 18, 2024
Verified
If a monopoly firm can sell its eighth unit of output for a price of $175,it may expect to receive a price __________ in order to sell more than eight units.
A) of more than $175
B) of $175
C) of less than $175
D) of $100
E) of less than $100
Eighth Unit
A term that could refer to the unit in a sequence or series, specifically the one that comes eighth in order.
Output
The total amount of goods or services produced by a company, sector, or economy over a specific period.
Price
The amount of money expected, required, or given in payment for something.
- Recognize characteristics that differentiate monopolies from perfectly competitive markets.
Verified Answer
JI
Jaylon IngramJun 22, 2024
Final Answer :
C
Explanation :
Monopoly firms face a downward sloping demand curve. Selling the eighth unit for a high price of $175 is an indication that the firm is likely operating in a market with inelastic demand. To sell more than eight units, the firm would need to lower the price, thereby increasing the quantity demanded. However, as the firm lowers the price, the demand becomes more elastic, which means that the firm would need to accept a lower price to increase its sales. Therefore, the firm would expect to receive a price less than $175 to sell more than eight units.
Learning Objectives
- Recognize characteristics that differentiate monopolies from perfectly competitive markets.