If a Non-Discriminating Monopolist Decides to Lower Its Price to Sell

question 117

Multiple Choice

If a non-discriminating monopolist decides to lower its price to sell one more unit of its product,then

• A)total revenue rises by an amount equal to the price
• B)some revenue is lost to the extent that units previously sold at a higher price now sell for a lower price;however,the additional unit sold brings in new revenue
• C)marginal revenue increases when total revenue increases
• D)the net effect on total revenue is typically zero since the price must fall
• E)the net effect on total revenue is typically negative since the price must fall

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Definitions:

Discount Rate

The interest rate charged by central banks on loans offered to commercial banks or other financial institutions.

Reserve Requirement

The minimum percentage of deposits that banks are required to hold in reserve rather than lend out, set by central banking authorities to help control the money supply.

Open Market

A freely competitive market where any buyer or seller can participate without restrictions.

Savings Accounts

Financial accounts at banks or other financial institutions that pay interest on deposits, allowing individuals to save money over time.