A Monopolist Faces a Straight- Line Demand Curve and Is

question 101

Multiple Choice

A monopolist faces a straight- line demand curve and is currently producing an output level of 2000 units receiving $10 000 in total revenue. At an output of 1 000 units the marginal revenue for this firm would be

• A) 0.
• B) $2.50.
• C) $5.00.
• D) $10.00
• E) impossible to tell with the given information.

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Definitions:

Output

Output is the quantity of goods or services produced by a company, industry, or economy within a specified period.

Average Product

The output per unit of input, calculated by dividing total output by the quantity of inputs.

Law of Diminishing Returns

An economic principle stating that as additional units of a factor of production are added to a fixed amount of another factor, the incremental increase in output will eventually decrease.

Thomas Malthus

Thomas Malthus was an 18th-century British economist and demographer, best known for his theory that population growth would outpace agricultural production, leading to widespread poverty and famine.