Asked by Jordon Smith on Jun 22, 2024
Verified
When a monopolist increases the quantity that it sells, all else equal, total revenue increases, which is called the output effect.
Output Effect
The change in total output caused by a new price level, in the context of supply and demand.
Total Revenue
Total revenue is the full amount of money received by a company for its goods or services before any expenses are subtracted.
- Understand the effects of monopolistic production choices on revenue and profit maximization.
Verified Answer
NS
Nurul SyahirahJun 28, 2024
Final Answer :
True
Explanation :
The output effect refers to the increase in total revenue that a monopolist experiences from selling additional units of a product, as the revenue from the sale of more units can outweigh the loss from selling each unit at a lower price, assuming demand is not perfectly inelastic.
Learning Objectives
- Understand the effects of monopolistic production choices on revenue and profit maximization.