The Figures Given Below Represent the Revenue Curves of a Monopolist.Figure

question 17

Multiple Choice

The figures given below represent the revenue curves of a monopolist.Figure 11.2
TR: Total revenue curve
AR: Average revenue curve
MR: Marginal revenue curve
-If at an output of 10 units a monopolist is earning a positive profit, marginal revenue is $6, and marginal cost is $4, then the monopolist:

• A)is in equilibrium.
• B)should increase output.
• C)should reduce output.
• D)should lower the price at the current output level.
• E)should raise the price at the current output level.

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Definitions:

Structure of Incentives

The arrangement or design of rewards and penalties that influence the behavior of individuals and organizations towards certain actions over others.

Spillover Effects

Spillover Effects are unintended consequences of an economic activity that affect third parties who are not directly involved in the activity itself.

Nonconsenting Third Parties

Nonconsenting third parties are individuals or groups that are affected by the actions of others without having agreed to or participated in the decision-making process.

Externalities

Costs or benefits that affect a party who did not choose to incur those costs or benefits, often leading to market failure if not addressed.