Assume That Pura Water,a Local Monopoly Water Utility Company,is Currently

question 121

Multiple Choice

Assume that Pura Water,a local monopoly water utility company,is currently selling 10,000 gallons per hour at a price of $0.10 per gallon.If Pura Water wants to sell 1,000 gallons more,it will have to lower the price to $0.09 per gallon.The marginal revenue of the 10,001 is approximately

• A) -$999.91.
• B) -$99.91.
• C) $9.91.
• D) $99.91.

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Definitions:

Demand Price

The price of a given quantity at which consumers will demand that quantity.

Perfectly Inelastic

A market situation where the quantity demanded or supplied does not change in response to a change in price.

Deadweight Loss

The inefficiency caused in a market where all potential gains from trade are not realized due to factors like taxes or subsidies.

Per-Unit Tax

A tax imposed on a product on a per unit basis, raising the cost of production or sale for that product.