The correct answer is: C. (A) is true, but (R) is false
A monopoly firm’s revenue curve is downward sloping from left to right because the firm faces a downward-sloping demand curve. This means that if the firm wants to sell more units, it must lower its price. However, the reason for this is not because the monopoly firm does not simultaneously enjoy the freedom to determine both price and quantity to be sold according to its whims and fancy. In fact, a monopoly firm does have this freedom. The reason why the firm’s revenue curve is downward sloping is because of the law of demand, which states that consumers will demand less of a good or service as the price of that good or service increases.
Here is a more detailed explanation of each option:
- A. Both (A) and (R) are true. This is not the correct answer because (R) is false. A monopoly firm does simultaneously enjoy the freedom to determine both price and quantity to be sold according to its whims and fancy.
- B. Both (A) and (R) are false. This is not the correct answer because (A) is true. A monopoly firm’s revenue curve is downward sloping from left to right.
- C. (A) is true, but (R) is false. This is the correct answer because (A) is true and (R) is false. A monopoly firm’s revenue curve is downward sloping from left to right, but this is not because the monopoly firm does not simultaneously enjoy the freedom to determine both price and quantity to be sold according to its whims and fancy.
- D. (A) is false, but (R) is true. This is not the correct answer because (A) is true. A monopoly firm’s revenue curve is downward sloping from left to right.