A Single-Price Monopoly Faces a Linear Demand Curve

question 64

Multiple Choice

A single-price monopoly faces a linear demand curve. If the marginal revenue for the second unit is $20, then the marginal revenue for the

• A) third unit is also $20.
• B) first unit is less than $20.
• C) third unit is less than $20.
• D) third unit is more than $20.
• E) more information is needed to determine if the marginal revenue for the third unit is more than, less than or equal to $20.

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Definitions:

Exclusive Dealing

An arrangement where a retailer or distributor is restricted to purchasing or selling the products of one supplier.

Wholly Owned

A company or entity that is 100% owned by another company or individual.

Vertical Boycott

An anti-competitive practice where companies at different supply chain levels agree not to deal with a particular company or group.

Sherman Act

A landmark federal statute in the anti-trust law of the United States that prohibits monopolistic practices and promotes competition.