When a Monopolist Sells Additional Units

question 94

Multiple Choice

When a monopolist sells additional units,

• A) total revenue always increases.
• B) marginal revenue is constant.
• C) total revenue always decreases.
• D) marginal revenue increases.
• E) total revenue may increase,decrease,or remain unchanged.

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Definitions:

Maximize

The process of increasing a particular outcome or value to its highest possible level given a set of constraints.

Income Effect

The change in an individual's or economy's income and how that change will impact the quantity demanded of a good or service.

Substitution Effect

The substitution effect occurs when consumers replace pricier goods with cheaper alternatives as prices change, reflecting changes in consumption patterns due to relative price differences.

Diminishing Marginal Utility

The principle that as a person consumes more of a good, the additional satisfaction gained from consuming an additional unit of the good decreases.