(Table) Suppose a Monopolist Faces the Demand Schedule Shown in the Table

question 69

Multiple Choice

(Table) Suppose a monopolist faces the demand schedule shown in the table. If the firm is currently selling 4 units per day and wants to sell 5 units per day, what is the effect on total revenue for this sale of one additional unit?
$\begin{array}{|c|c|}\hline \begin{array}{c}\text { Quantity } \\\text { Demanded }\end{array} & \text { Price } \\\hline 1 & \$ 10 \\\hline 2 & \$ 8 \\\hline 3 & \$ 7 \\\hline 4 & \$ 5 \\\hline 5 & \$ 3 \\\hline 6 & \$ 2 \\\hline\end{array}$

• A) Total revenue falls by $5.
• B) Total revenue rises by $20.
• C) There is no effect on total revenue.
• D) Total revenue falls by $15.

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Definitions:

Parsimonious Theory

A theory that explains a phenomenon in the simplest terms, using a minimum number of principles or assumptions.

Diverse Observations

Encompasses the act of noticing or perceiving a wide range of different aspects, situations, or behaviors, emphasizing the importance of a broad perspective.

Simple Principles

Basic, fundamental rules or concepts that guide actions, decisions, or procedures.

Confound

A variable other than the one intended to be manipulated by the experimenter that may be responsible for the effect on the dependent variable, making alternative explanations possible.