Use the following to answer question:
-(Table: Demand for Crude Oil)Use Table: Demand for Crude Oil.The marginal cost of producing crude oil is zero.If the crude oil industry is a monopoly,the price of crude oil will be _____,the total quantity of crude oil produced by the monopoly will be _____ barrels,and the monopoly will earn revenue equal to _____.
A)$80;80;$6,400
B)$80;80;$0
C)$160;0;$0
D)$60;100;$6,000

Question

Use the following to answer question: 
-(Table: Demand for Crude Oil)Use Table: Demand for Crude Oil.The marginal cost of producing crude oil is zero.If the crude oil industry is a monopoly,the price of crude oil will be _____,the total quantity of crude oil produced by the monopoly will be _____ barrels,and the monopoly will earn revenue equal to _____.
A)$80;80;$6,400 
B)$80;80;$0 
C)$160;0;$0 
D)$60;100;$6,000

Quizplus · Accepted Answer

In a monopoly, the firm will produce where marginal revenue equals marginal cost. Given that the marginal cost is zero, the monopoly will set the price at the highest point on the demand curve where it can still sell its product. The table (not visible here) likely indicates that at a price of $80, 80 barrels of crude oil will be demanded, leading to a revenue of $80 * 80 = $6,400.

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