A Monopoly Sells 5 Units of Output at $20

question 134

Multiple Choice

A monopoly sells 5 units of output at $20. If the MR of the 6th unit is $14, then the price of the 6th unit is

• A) also $14.
• B) $17.
• C) greater than $20.
• D) $19.

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Definitions:

Cross-elasticity of Demand

A measure of how the quantity demanded of one good responds to a change in the price of another good, indicating substitutes or complements.

Normal Goods

Items for which demand increases as consumer income rises, showing a positive correlation between income and demand.

Law of Supply

A fundamental principle stating that, all else being equal, an increase in the price of a good will result in an increase in the quantity supplied.

Price-elasticity of Supply Coefficient

A numerical measure of how much the quantity supplied of a good responds to a change in its price.