Use the following to answer questions:
-(Table: Demand for Crude Oil) Look at the table Demand for Crude Oil. The marginal cost of producing crude oil is zero. If the crude oil industry is a monopoly, the price of crude oil will be _____, the total quantity of crude oil produced by the monopoly will be _____ barrels, and the monopoly will earn revenue equal to _____.
A) $80; 80; $6,400
B) $80; 80; $0
C) $160; 0; $0
D) $60; 100; $6,000

Question

Use the following to answer questions: 
-(Table: Demand for Crude Oil) Look at the table Demand for Crude Oil. The marginal cost of producing crude oil is zero. If the crude oil industry is a monopoly, the price of crude oil will be _____, the total quantity of crude oil produced by the monopoly will be _____ barrels, and the monopoly will earn revenue equal to _____.
A) $80; 80; $6,400 
B) $80; 80; $0 
C) $160; 0; $0 
D) $60; 100; $6,000

Quizplus · Accepted Answer

The marginal cost of producing crude oil is zero, so the monopoly will produce the quantity where marginal revenue equals zero. The demand curve is downward sloping, so marginal revenue is below the demand curve. The monopoly will produce 80 barrels of crude oil and sell it for $80 per barrel, earning revenue of $6,400.

Use the Following to Answer Questions