When a Monopoly Increases Its Output and Sales

question 527

Multiple Choice

When a monopoly increases its output and sales,

• A)both the output effect and the price effect work to increase total revenue.
• B)the output effect works to increase total revenue, and the price effect works to decrease total revenue.
• C)the output effect works to decrease total revenue, and the price effect works to increase total revenue.
• D)both the output effect and the price effect work to decrease total revenue.

---

Definitions:

Sales

The exchange of goods or services for money, representing the primary revenue source for most businesses.

COGS

Stands for Cost of Goods Sold; it's the direct cost attributable to the production of the goods sold by a company, including both raw materials and labor costs.

Compensating Balance

A minimum bank account balance a borrower must maintain as part of a loan agreement.

Effective Annual Interest Rate

The real return on a savings account or any interest-bearing investment, taking into account the effect of compounding interest.