Question

Suppose a firm has a monopoly on the sale of widgets and faces a downward-sloping demand curve. When selling the 100th widget, the firm will always receive A. less marginal revenue on the 100th widget than it received on the 99th widget. B. more average revenue on the 100th widget than it received on the 99th widget. C. more total revenue on the 100 widgets than it received on the first 99 widgets. D. a lower average cost per unit at 100 units of output than at 99 units of output.

Answer 1

When selling the 100th widget, the firm will always receive A. less marginal revenue on the 100th widget than it received on the 99th widget.

A downward-sloping demand curve simply means that when there's a reduction in the price of a good, the consumers will purchase more of that product.

Based on the information given, when selling the 100th widget, the firm will always receive less marginal revenue on the 100th widget than it received on the 99th widget. The marginal revenue is the increase in revenue based on an additional unit of output that's sold.

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