As output increases in a monopoly, the firm's total revenue:
A)first increases and then decreases
B)first decreases and then increases
C)increases continuously
D)decreases continuously

Question

Quizplus · Accepted Answer

In a monopoly, as output increases, the firm's total revenue first increases at a decreasing rate and then starts to decrease due to the downward-sloping demand curve. This means the firm must lower the price to sell more units, which eventually leads to a decrease in total revenue after a certain point.

As Output Increases in a Monopoly, the Firm's Total Revenue