Suppose a Firm Has a Monopoly on the Sale of Widgets

question 478

Multiple Choice

Suppose a firm has a monopoly on the sale of widgets and faces a downward-sloping demand curve. When selling the 100^th widget, the firm will always receive

• A)less marginal revenue on the 100^th widget than it received on the 99^th widget.
• B)more average revenue on the 100^th widget than it received on the 99^th widget.
• C)more total revenue on the 100 widgets than it received on the first 99 widgets.
• D)a lower average cost per unit at 100 units of output than at 99 units of output.

---

Definitions:

Amortized Cost Basis

An accounting method that gradually writes off the initial cost of an asset over a period, which reflects its consumption or use over time.

Credit Loss

Credit Loss is the loss incurred by a lender when a borrower fails to repay a loan, and the recoverable amount is less than the outstanding balance.

Effective Interest Rate

The real cost of borrowing, taking into account the effects of compounding interest.

Debt Security

A financial instrument representing a loan made by an investor to a borrower, typically corporate or governmental, where the borrower is obligated to pay back with interest.