Table 15-8
The following table provides information on the price, quantity, and average total cost for a monopoly.
-Refer to Table 15-8. How much extra revenue does the monopolist earn when he lowers the price from $18 to $12?
A)$10
B)$12
C)$30
D)$41

Question

Table 15-8
The following table provides information on the price, quantity, and average total cost for a monopoly. 
-Refer to Table 15-8. How much extra revenue does the monopolist earn when he lowers the price from $18 to $12?
A)$10 
B)$12 
C)$30 
D)$41

Quizplus · Accepted Answer

To find the extra revenue earned by the monopolist, we need to multiply the change in quantity (25-50 = -25) by the new price ($12): 
-25 x $12 = -$300 (negative because it represents a loss in revenue)
However, since the monopolist is a profit-maximizer, they will only lower the price if it leads to an increase in total revenue. In this case, the extra revenue from selling an additional 25 units (50-25=25) at the lower price of $12 is:
25 x $30 = $750
Therefore, the net extra revenue is $750 - $300 = $450. The best choice is C) $30.

Table 15-8 the Following Table Provides Information on the Price, Quantity, and Quantity