Use the following to answer question:
-(Table: Demand and Total Cost)Use Table: Demand and Total Cost.Lenoia runs a natural monopoly firm producing electricity for a small mountain village.The table shows Lenoia's demand and total cost of producing electricity.The price effect of increasing production from 3 megawatts to 4 megawatts is:
A)-$150.
B)$500.
C)$450.
D)-$50.

Question

Use the following to answer question: 
-(Table: Demand and Total Cost)Use Table: Demand and Total Cost.Lenoia runs a natural monopoly firm producing electricity for a small mountain village.The table shows Lenoia's demand and total cost of producing electricity.The price effect of increasing production from 3 megawatts to 4 megawatts is:
A)-$150. 
B)$500. 
C)$450. 
D)-$50.

Quizplus · Accepted Answer

The price effect is calculated as the change in revenue from selling one more unit, which is essentially the difference in total revenue before and after the change. Without specific numbers from the table, the general approach to find the price effect when increasing production from 3 to 4 megawatts involves calculating the revenue at 3 megawatts and at 4 megawatts, then finding the difference. The negative sign indicates a decrease in revenue, which aligns with the characteristics of a natural monopoly where increasing output can lead to a decrease in overall revenue due to the price needing to be lowered to sell the additional output.

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