Question 1
For a monopolist, if total revenue increases as output decreases, then marginal revenue is
◦ equal to price.
◦ zero.
◦ positive.
◦ negative.
Question 2
A monopolist will
not produce
◦ a positive level of output when its marginal revenue is declining.
◦ a positive level of output when its price is less than average total cost but greater than average variable cost.
◦ in the inelastic portion of its demand curve, where marginal revenue is negative.
◦ in the perfectly competitive level of output when it engages in perfect price discrimination.
