Homework Answers
The correct answer is 'Option B'.
The average revenue of a monopolist falls continuously as more output is produced. This is because the monopolist faces a downward sloping demand curve. The monopolist must lower the price of the product to sell more units as a result of which the marginal revenue decreases and will be less than the price. The average revenue is calculated by dividing the total revenue by quantity. So, the average revenue will decrease as more output is produced because the marginal revenue is decreasing. Therefore, the correct answer is 'Option B'.
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