The output effect describes the situation when a monopolist sells more output and, all else equal, total revenue
A)increases.
B)decreases.
C)is unchanged.
D)is maximized.

Question

Quizplus · Accepted Answer

The output effect refers to the increase in total revenue that occurs when a monopolist sells more output at a lower price. As long as the marginal revenue from selling one more unit is positive, the increase in quantity sold will lead to an increase in total revenue. Therefore, the correct answer is A - total revenue increases.

The Output Effect Describes the Situation When a Monopolist Sells