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-(Table: Prices and Demand) The New Orleans Saints have a monopoly on Saints logo hats. The marginal cost of producing a hat is $18. If the Saints increase the number of hats they sell from four to five, the quantity effect is a(n) _____ in total revenue of _____.
A) decrease; $20
B) increase; $20
C) decrease; $8
D) increase; $8

Question

Use the following to answer questions: 
-(Table: Prices and Demand) The New Orleans Saints have a monopoly on Saints logo hats. The marginal cost of producing a hat is $18. If the Saints increase the number of hats they sell from four to five, the quantity effect is a(n) _____ in total revenue of _____.
A) decrease; $20 
B) increase; $20 
C) decrease; $8 
D) increase; $8

Quizplus · Accepted Answer

The quantity effect refers to the change in total revenue from selling one more unit. If the Saints sell one more hat, the total revenue increases by the price of that additional hat, which is $20.

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