-Refer to the Table Above

question 50

Multiple Choice

-Refer to the table above.When the firm lowers price from $8 to $7,marginal revenue is less than $7 because

• A) marginal cost is greater than $3.
• B) the consumer only pays $4 for the fourth unit.
• C) the firm is charging $1 less for each of the first three units of output.
• D) demand is perfectly elastic.
• E) the firm only collects $4 for the fourth unit.

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Definitions:

Monopoly Power

The exclusive control or significant influence over a market by a single company, allowing it to restrict competition and dictate prices.

Price Discriminating

It involves charging different prices for the same product or service to different consumers, based on the willingness to pay, often to maximize sales and profits.

Pure Monopolist

A single seller in a market that produces a unique product without close substitutes, controlling the market price.

Marginal Cost

The cost incurred by producing one additional unit of a product or service.