A monopoly firm can sell its fourth unit of output for a price of $250. To sell more than five units, it must expect to receive a price:
A) equal to $250.
B) greater than $250.
C) less than $250.
D) equal to $340.

Question

Quizplus · Accepted Answer

To sell more than five units, a monopoly must lower its price on all units sold, including the fourth unit, due to the downward-sloping demand curve it faces. This means the price for units beyond the fifth would be less than $250.

A Monopoly Firm Can Sell Its Fourth Unit of Output