Answer:
The correct answer is letter "D": the output effect works to increase total revenue and the price effect works to decrease total revenue.
Explanation:
The output effect in a monopoly takes place when the price of input will raise the production costs of a business and reduce its output level and vice-versa. The price effect refers to the impact an activity has on the value of something. The price effect consists of the effect of substitution and the effect of profits. While the output effect has the purpose of increasing revenue, the price effect works towards decreasing it.
When the monopoly increases its outputs and its sale, the output effect works to increase total revenue and the price effect works to decrease total revenue.
This is the market system that is used to refer to a single seller or producer of a commodity in the market which has no close substitute.
The monopolist is a person that has no competitors in the market. They set the prices and make abnormal profit.
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