Which of the following can be concluded about a monopolist whose marginal revenue is zero for a particular output level?
A)The economic profit earned by the monopolist by producing that output level is zero.
B)Total revenue earned by the monopolist is maximum at that output level.
C)Total revenue earned by the monopolist increases at an increasing rate as output increases beyond that output level.
D)Total revenue earned by the monopolist increases at a decreasing rate as output increases beyond that output level.
E)Average revenue earned by the firm for that output level is less than marginal revenue for that output level.

Question

Which of the following can be concluded about a monopolist whose marginal revenue is zero for a particular output level?​
A)The economic profit earned by the monopolist by producing that output level is zero.
B)Total revenue earned by the monopolist is maximum at that output level.
C)Total revenue earned by the monopolist increases at an increasing rate as output increases beyond that output level.
D)Total revenue earned by the monopolist increases at a decreasing rate as output increases beyond that output level.
E)Average revenue earned by the firm for that output level is less than marginal revenue for that output level.

Quizplus · Accepted Answer

When the marginal revenue is zero, it means that any additional unit produced would not generate any extra revenue. Therefore, the total revenue for that output level would be maximum. This is because the monopolist is earning the highest possible price for each unit sold at that output level.

Which of the Following Can Be Concluded About a Monopolist