What happens to a monopoly's revenue when it sells more units of its product?
What will be an ideal response?
The monopolist must lower its price to sell more. Two things happen when a monopolist lowers its price. First, revenue will tend to rise as the monopolist sells more units and second, revenue tend to fall because less revenue is received from each unit than the amount received at the higher price. The total effect on total revenue could be an increase, a decrease, or no change in total revenue.
You might also like to view...
In the figure above, the economy is at an equilibrium with real GDP of $16 trillion and a price level of 110. At this point there is
A) an inflationary ga
A nation's country-risk premium increases if:
a. Central bank policies become more predictable. b. Expected inflation becomes harder to predict. c. Its government becomes more stable. d. All of the above. e. None of the above
In this graph for the marginal costs and benefits of pollution controls, at output level Q*, pollution control is ______.
a. unnecessary
b. optimized
c. insufficient
d. excessive
According to monetarists, when will the economy move back to the natural rate of unemployment after a change in output?
a) In the short-run. b) In the long-run. c) Immediately after a decrease in the money supply. d) Immediately after an increase in the money supply.