A pure monopolist is selling six units at a price of $12.If the marginal revenue of the seventh unit is $5, then the
A)price of the seventh unit is $10.
B)price of the seventh unit is $11.
C)price of the seventh unit is greater than $12.
D)firm's demand curve is perfectly elastic.

Question

Quizplus · Accepted Answer

In a monopoly, the price of the additional unit (seventh unit) is higher than its marginal revenue. If the marginal revenue of the seventh unit is $5, the price must be higher than $5. Given the options, $11 is the only price that fits this condition, as it is higher than the marginal revenue of $5 but less than the original price of $12.

A Pure Monopolist Is Selling Six Units at a Price