Table 15-4
A monopolist faces the following demand curve:
-Refer to Table 15-4. If the monopolist produces 5 units, what is its average revenue?

Question

Table 15-4
A monopolist faces the following demand curve: 
-Refer to Table 15-4. If the monopolist produces 5 units, what is its average revenue?

Quizplus · Accepted Answer

To calculate the average revenue, we divide the total revenue by the quantity produced. At a quantity of 5 units, the price is $25. Therefore, the total revenue is 5 x $25 = $125. Dividing $125 by 5 units, the average revenue is $25. Therefore, the answer is B ($20 is not an option).

Table 15-4 A Monopolist Faces the Following Demand Curve