The following table shows the quantity demanded of a good at various prices for a monopoly firm.
Table 11-1 $$\begin{array} { | c | c | }
\hline \text { Quantity } & \text { Price } \
\hline 1 & \$ 90 \
\hline 2 & \$ 80 \
\hline 3 & \$ 70 \
\hline 4 & \$ 60 \
\hline 5 & \$ 50 \
\hline 6 & \$ 40 \
\hline 7 & \$ 30 \
\hline 8 & \$ 20 \
\hline 9 & \$ 10 \
\hline
\end{array}$$
-Refer to Table 11-1.The firm earns the maximum total revenue when it produces _____ units.
A)3
B)4
C)5
D)6

Question

The following table shows the quantity demanded of a good at various prices for a monopoly firm.
Table 11-1 $$\begin{array} { | c | c | } 
\hline \text { Quantity } & \text { Price } \
\hline 1 & \$ 90 \
\hline 2 & \$ 80 \
\hline 3 & \$ 70 \
\hline 4 & \$ 60 \
\hline 5 & \$ 50 \
\hline 6 & \$ 40 \
\hline 7 & \$ 30 \
\hline 8 & \$ 20 \
\hline 9 & \$ 10 \
\hline
\end{array}$$
-Refer to Table 11-1.The firm earns the maximum total revenue when it produces _____ units.
A)3
B)4
C)5
D)6

Quizplus · Accepted Answer

The total revenue earned by a firm is equal to the product of the price of the good and the quantity sold. In this case, the total revenue for each quantity can be calculated as follows:

1 * 90 = $90
2 * 80 = $160
3 * 70 = $210
4 * 60 = $240
5 * 50 = $250
6 * 40 = $240
7 * 30 = $210
8 * 20 = $160
9 * 10 = $90

As we can see from the table, the total revenue initially increases as the quantity sold increases, but it starts to decrease after reaching a maximum at 5 units, where the total revenue is $250. Therefore, to maximize its total revenue, the firm should produce and sell 5 units of the good.

The Following Table Shows the Quantity Demanded of a Good