When a Monopolist Lowers Its Price from $80 to $70

question 37

Multiple Choice

When a monopolist lowers its price from $80 to $70, the quantity it is able to sell increases from 100 to 150. The change in revenue associated with the output effect is equal to:

• A) $3,500.
• B) ?$3,500.
• C) $500.
• D) ?$500.
• E) $4,000.

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Definitions:

Ultimate Attribution Error

A perceptual bias occurring in intergroup relations. Negative behaviors by out-group members are attributed to stable, internal factors such as undesirable personal traits or dispositions, but positive behaviors by out-group members are attributed to unstable, external factors such as situational pressures or luck. As a result, in-group observers will blame the out-group for negative outcomes but will not give it credit for positive outcomes.

Out-group Homogeneity

The perception that members of a group different from ours are more similar to each other than they actually are, often leading to stereotyping.

Goal Isomorphism

In groups, a state in which group goals and individual goals held by a member are similar in the sense that actions leading to the attainment of group goals also lead simultaneously to the attainment of individual goals.

Primary Groups

Social groups characterized by close, personal, and enduring relationships, often playing a critical role in socialization.