Hi Phi Sound Unlimited Has a Monopoly Over the Installation

question 340

Multiple Choice

Hi Phi Sound Unlimited has a monopoly over the installation of surround sound systems. Hi Phi Unlimited's total revenue from installing 15 sound systems is $30,000 and its total revenue from installing 18 sound systems is $33,000. The marginal revenue received from selling the 18th sound system is

• A) equal to the price of the 16th sound system.
• B) greater than the price of the 16th sound system.
• C) less than the price of the 16th sound system.
• D) Indeterminate from the given information.

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Definitions:

Variable Cost

Costs that vary directly with the level of production or output, such as materials and labor costs.

Net Income

The total profit of a company after subtracting all expenses from revenues.

Fixed Costs

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.

Fixed Costs

Fixed costs are business expenses that do not change with the level of output or sales, such as rent or salaries.