A Monopolist Will Never Operate on the Lower Half of the Demand

question 52

Multiple Choice

A monopolist will never operate on the lower half of the demand curve because for this range of output:

• A)average revenue is negative.
• B)marginal cost exceeds marginal revenue.
• C)total revenue can be increased further.
• D)marginal revenue is positive.

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Definitions:

Useful Life

The estimated duration of time an asset is expected to be useful for the business before it becomes obsolete or too costly to maintain.

Operating Cost

Expenses associated directly with the day-to-day running of a business, including costs for materials, labor, and utilities.

Value-Based Pricing

A pricing strategy where the price of a product or service is determined by the perceived value it brings to the customer rather than its cost of production or market competition.

Absorption Costing

An accounting formula that rolls in every cost incurred in manufacturing—direct materials, direct labor, and both variable and fixed manufacturing overhead—into the product’s final cost.