Use the following figure to answer the question : Figure 11-5 : shows the demand curve and the marginal revenue curve of a monopolist.On the horizontal axis,OG = GF.
-Refer to Figure 11-5.A fall in price will decrease total revenue _____.
A)between the points E and F
B)between the points E and A
C)between the points A and F
D)at point G

Question

Use the following figure to answer the question : Figure 11-5 : shows the demand curve and the marginal revenue curve of a monopolist.On the horizontal axis,OG = GF. 
-Refer to Figure 11-5.A fall in price will decrease total revenue _____.
A)between the points E and F 
B)between the points E and A 
C)between the points A and F 
D)at point G

Quizplus · Accepted Answer

From the graph, we can see that the demand curve is negatively sloped, which means that as the price falls, quantity demanded increases. However, the marginal revenue curve is below the demand curve, which means that the revenue gained from selling an additional unit of a good is less than the price of that unit. Therefore, a fall in price will lead to a decrease in total revenue for the monopolist. The vertical distance between the demand and marginal revenue curves represents the reduction in revenue from selling an additional unit. This distance is larger between points A and F than between points E and F or between points E and A, so the best choice is C.

Use the Following Figure to Answer the Question : Figure