In 1999, a judge declared that Microsoft was a monopolist.Assuming that it was maximizing its profits at its chosen level of output, we may conclude that if Microsoft was to increase its price its total revenue would have:
A) risen
B) fallen
C) remained unchanged
D) insufficient information upon which to make a determination.

Question

Quizplus · Accepted Answer

If Microsoft was declared a monopolist and was already maximizing profits at its chosen level of output, it means any increase in price would result in a decline in quantity demanded. Therefore, total revenue would have fallen due to the negative impact on quantity demanded, even if the price had increased. Therefore, the correct answer is B.

In 1999, a Judge Declared That Microsoft Was a Monopolist