Which of the following can be concluded about a monopolist whose marginal revenue is zero for a particular output level?
A)The economic profit earned by the monopolist by producing that output level is zero.
B)Total revenue earned by the monopolist is at its maximum at that output level.
C)Total revenue earned by the monopolist increases at an increasing rate as output increases beyond that output level.
D)Total revenue earned by the monopolist increases at a decreasing rate as output increases beyond that output level.
E)Average revenue earned by the firm for that output level is less than marginal revenue for that output level.

Question

Quizplus · Accepted Answer

When marginal revenue is zero, the monopolist is producing at the output level where total revenue is at its maximum. This is because for a monopolist, marginal revenue is equal to its price and when marginal revenue is zero, the monopolist has reached the output level where the price is the highest it can be. Therefore, total revenue is at its maximum for that output level.

Which of the Following Can Be Concluded About a Monopolist