Suppose a Firm Has a Monopoly on the Sale of a Computer

question 330

Multiple Choice

Suppose a firm has a monopoly on the sale of a computer game and faces a downward-sloping demand curve.When selling the 50^th game,the firm will always receive

• A) less marginal revenue on the 50^th game than it received on the 49^th game.
• B) more average revenue on the 50^th game than it received on the 49^th game.
• C) more total revenue on the 50 game than it received on the first 49 game.
• D) Both b)and c)are correct.

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Definitions:

Economic Downturn

A period of reduced economic activity characterized by declines in spending and investment, often leading to recession.

Diversification

A risk management strategy that mixes a wide variety of investments within a portfolio to reduce exposure to any single asset or risk.

Diversifiable Risk

A type of risk that can be reduced or eliminated from a portfolio through investments in a variety of assets, also known as unsystematic risk.

Arbitrage Pricing Model

A theory for asset pricing that takes into account multiple risk factors and the return of an asset, assuming no arbitrage opportunities.