When a monopolist increases sales by one unit
a)more low priced sales caused negative marginal
b)every other unit must be sold at a lower price
c)gains some revenue from selling the extra unit
D)loses some revenue and all of the above
Since your question says nothing about the price of the unit to the purchaser, your answer is C. If the monopolist was undercutting competitors so as to gain market share, the answer might be different.
c) gains some revenue from selling the extra unit.
The correct answer is option c) gains some revenue from selling the extra unit.
When a monopolist increases sales by one unit, they are able to charge a price above the marginal cost of producing that additional unit. As a result, they are able to earn additional revenue from selling the extra unit. This is because monopolists have a certain level of market control and can set prices higher than their marginal cost, unlike perfectly competitive firms which must sell at market price.
To understand why option c) is the correct answer, let's break down the options and how they relate to a monopolist's behavior:
a) "More low priced sales caused negative marginal": This statement is not necessarily true for a monopolist. A monopolist has the power to increase prices as they have limited competition, so they are not necessarily forced to lower the price for additional sales. As a result, their marginal revenue will depend on their pricing strategy and elasticity of demand.
b) "Every other unit must be sold at a lower price": This statement is also not necessarily true for a monopolist. While it is true that monopolists may lower prices to increase sales, it is not a definite requirement. Monopolists can choose their pricing strategy based on factors like demand elasticity and profit maximization, so they may or may not sell additional units at a lower price.
c) "Gains some revenue from selling the extra unit": This statement is accurate. When a monopolist sells an additional unit, they can charge a price above their marginal cost, allowing them to earn additional revenue. This is because a monopolist has the power to set prices based on their market control, which allows them to increase revenue from each unit sold.
Therefore, the correct answer is c) gains some revenue from selling the extra unit.