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A profit-maximizing monopoly's total revenue is equal to

A profit-maximizing monopoly’s total revenue is equal to

a. p5 × q3.
b. (p5 − p4) × q3.
c. (p5 − p3) × q3.
d. p4 × q5.

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1 Answer

  1. To determine the correct answer, we need to understand the relationship between price (p) and quantity (q) in the context of a monopoly’s total revenue.

    Total Revenue (TR) for a firm is calculated as the product of the price (p) it charges for its product and the quantity (q) of the product it sells. Therefore, the formula for total revenue is:

    TR=p×qTR = p \times q

    Given the options, we need to identify which option correctly represents this formula for total revenue. Let’s analyze each option:

    a. p5×q3p5 \times q3

    b. (p5p4)×q3(p5 – p4) \times q3

    c. (p5p3)×q3(p5 – p3) \times q3

    d. p4×q5p4 \times q5

    To match the total revenue formula TR=p×qTR = p \times q:

    • Option (a) suggests multiplying p5p5 by q3q3.
    • Option (b) suggests multiplying the difference between two prices (p5p4p5 – p4) by a quantity (q3q3).
    • Option (c) suggests multiplying the difference between two prices (p5p3p5 – p3) by a quantity (q3q3).
    • Option (d) suggests multiplying p4p4 by q5q5.

    The correct option must involve simply multiplying a price term by a quantity term. This means we need an option where the price term and the quantity term are not adjusted or combined with other terms.

    Only options (a) and (d) fit the straightforward multiplication form of p×qp \times qp×q.

    Given the structure of the question, the total revenue should match the formula p×qp \times qp×q directly. Since we do not have any context for the numbers associated with prices and quantities, we can focus on the format.

    Thus, the correct option is:

    a. p5×q3p5 \times q3

    This option represents the total revenue as the product of a price (p5) and a quantity (q3), which fits the formula TR=p×qTR = p \times q