Q: If a monopolist’s average revenue at Q = 4 is $$40$$, what is the total revenue at that output?

$$TR = AR \times Q = 40 \times 4 = 160$$

Question 1

Suppose a monopolist faces a downward-sloping demand curve. If the monopolist lowers the price to sell more units, which of the following best describes the effect on marginal revenue?

Accepted Answer

Marginal revenue will be less than the price.

Question 2

Given the following data for a monopolist: At Q = 3, P = 50, Total Revenue = $$150$$, what is the marginal revenue when output increases from 2 to 3 units?

Accepted Answer

$$MR = TR_{3} - TR_{2} = 150 - 120 = 30$$

Question 3

Which of the following statements about monopoly and perfect competition is correct?

Accepted Answer

A monopoly’s marginal revenue is less than its average revenue.

Question 4

If a monopolist increases output, which of the following is most likely to occur?

Accepted Answer

Marginal revenue may become negative if the price effect outweighs the output effect.

Question 5

Consider a monopolist selling cable subscriptions. If the price drops from $$60 to 50$ when increasing subscribers from 2 to 3, what is the change in total revenue?

Accepted Answer

$$TR_{3} - TR_{2} = 150 - 120 = 30$$

Question 6

Which formula correctly calculates a monopolist’s marginal revenue?

Accepted Answer

$$MR = \frac{\Delta TR}{\Delta Q}$$

Question 7

A monopolist’s price effect refers to:

Accepted Answer

The decrease in revenue per unit sold because of the price decrease.

Question 8

If a monopolist’s average revenue at Q = 4 is $$40$$, what is the total revenue at that output?

Accepted Answer

$$TR = AR 	imes Q = 40 	imes 4 = 160$$

Question 9

Which of the following best describes the output effect for a monopolist?

Accepted Answer

The firm earns more revenue because it sells more quantity at the lower price.

Question 10

In the context of monopoly pricing, which statement is true?

Accepted Answer

A monopolist’s marginal revenue is always less than the price of the good.

Question 11

If a monopolist’s demand curve is downward sloping, what happens to average revenue as output increases?

Accepted Answer

Average revenue decreases.

Question 12

Which of the following is NOT a characteristic of monopoly markets?

Accepted Answer

Perfectly elastic demand curve.

Question 13

A monopolist is considering increasing output from 4 to 5 units. The price drops from $$40 to$$ $$30. $$What is the marginal revenue for the fifth unit?

Accepted Answer

$$MR = TR_{5} - TR_{4} = 150 - 160 = -10$$

Question 14

Which of the following best explains why a monopolist’s marginal revenue is less than price?

Accepted Answer

Because the monopolist must lower the price on all units to sell additional units.

Question 15

If a monopolist’s total revenue at Q = 2 is $$120$$ and at Q = 3 is $$150$$, what is the average revenue at Q = 3?

Accepted Answer

$$AR = TR / Q = 150 / 3 = 50$$

Question 16

Which of the following is a plausible reason for barriers to entry in monopoly markets?

Accepted Answer

High fixed costs or government regulation prevent new firms from entering.

Question 17

In a monopoly, what happens to total revenue if the price effect is greater than the output effect when increasing quantity?

Accepted Answer

Total revenue decreases.

Question 18

Which equation correctly represents average revenue for a monopolist?

Accepted Answer

$$AR = \frac{TR}{Q}$$

Question 19

If a monopolist’s marginal revenue is negative, what does this imply about total revenue?

Accepted Answer

Total revenue is decreasing as output increases.

Monopoly Revenue: Marginal and Average Revenue in Monopoly Markets

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