Suppose a firm has a monopoly on the sale of widgets and faces a downward-sloping demand curve.When selling the 100^th widget,the firm will always receive A) less marginal revenue on the 100^th widget than it received on the 99^th widget. B) more average revenue on the 100^th widget than it received on the 99^th widget. C) more total revenue on the 100 widgets than it received on the first 99 widgets. D) a lower average cost per unit at 100 units output than at 99 units of output.

Question

Quizplus · Accepted Answer

In a monopoly with a downward-sloping demand curve, marginal revenue decreases as more units are sold, so the marginal revenue from the 100th widget is less than from the 99th.

Suppose a Firm Has a Monopoly on the Sale of Widgets