The following figure shows the demand curve and the marginal revenue curve of a monopolist.On the horizontal axis,OG = GF.
Figure 11-5
-Refer to Figure 11-5.A fall in price will increase total revenue _____.
A)between the points C and F
B)between the points E and A
C)between the points A and F
D)at point G

Question

The following figure shows the demand curve and the marginal revenue curve of a monopolist.On the horizontal axis,OG = GF.
Figure 11-5 
-Refer to Figure 11-5.A fall in price will increase total revenue _____.
A)between the points C and F 
B)between the points E and A 
C)between the points A and F 
D)at point G

Quizplus · Accepted Answer

According to the graph, the monopolist is currently charging the price at point A and selling quantity OF. Any decrease in price will result in an increase in quantity demanded, and the monopolist will move down the demand curve towards point B. At point B, the price is lower than at point A, but the increase in quantity demanded more than offsets the decrease in price, resulting in an increase in total revenue. However, if the monopolist lowers the price beyond point B, the increase in quantity demanded will not be sufficient to offset the decrease in price, resulting in a decrease in total revenue. Therefore, the best choice for increasing total revenue is to lower the price between points E and A.

The Following Figure Shows the Demand Curve and the Marginal