Suppose a Firm Has a Monopoly on the Sale of Widgets

question 138

Multiple Choice

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

• A) less marginal revenue on the 100th widget than it received on the 99th widget.
• B) more average revenue on the 100th widget than it received on the 99th 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 output than at 99 units of output.

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Definitions:

Direct Materials

Raw materials that are directly incorporated into and can be directly traced back to a finished product in the manufacturing process.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.

Inbound Transportation Cost

Expenses incurred in bringing raw materials or products from suppliers to a company's premises.

Sourcing

The process of identifying, evaluating, and selecting suppliers for goods or services required by a business.