This table represents the revenues faced by a monopolist. Using the information in the table shown,the average revenue for this firm:
A) decreases as output increases.
B) increases as output increases.
C) remains constant regardless of level of output.
D) is maximized when total revenue is maximized.

Question

This table represents the revenues faced by a monopolist.  Using the information in the table shown,the average revenue for this firm:
A) decreases as output increases. 
B) increases as output increases. 
C) remains constant regardless of level of output. 
D) is maximized when total revenue is maximized.

Quizplus · Accepted Answer

The average revenue is calculated by dividing the total revenue by the quantity sold. As the quantity sold increases, the price charged by the monopolist must decrease in order to sell additional units. Therefore, the average revenue decreases as output increases.

This Table Represents the Revenues Faced by a Monopolist