Suppose a firm has a monopoly on the sale of widgets and faces a downward-sloping demand curve.When selling the 100ᵗʰ widget,the firm will always receive
A) less marginal revenue on the 100th widget than it received on the 99th widget.
B) more average revenue on the 100th widget than it received on the 99th 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 on the 100th widget is less than on the 99th.

Suppose a Firm Has a Monopoly on the Sale of Widgets