Assume That at a Given Output a Monopolist's Marginal Revenue

question 138

Multiple Choice

Assume that at a given output a monopolist's marginal revenue is $25 and its marginal cost is $18.If the monopolist increases output,then

• A)price,marginal cost,and total profit will fall.
• B)price will fall,marginal cost will rise,and total profit will rise.
• C)price will rise,marginal cost will fall,and total profit will rise.
• D)price,marginal cost,and total profit will rise.

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Definitions:

Market Inefficiency

A situation where market prices do not always accurately reflect the true value of a good or service, possibly due to lack of information or irrational behavior.

Supply And Demand Diagram

A graphical representation of the relationship between the quantities of a good that sellers are willing to sell and buyers are willing to buy, at various prices.

Negative Externality

A negative externality occurs when a product or decision costs a third party who did not choose to incur that cost.

Wooden Sculpture

A piece of art or decorative object carved from wood.