322PART FIVEFIRM BEHAVIOR AND THE ORGANIZATION OF INDUSTRY2 gallons, it must lower the price to $9 in order to sell both gallons. And if itproduces 3 gallons, it must lower the price to $8. And so on. If you graphed thesetwo columns of numbers, you would get a typical downward-sloping demandcurve.The third column of the table presents the monopolist’s total revenue.It equalsthe quantity sold (from the first column) times the price (from the second column).The fourth column computes the firm’s average revenue,the amount of revenue thefirm receives per unit sold. We compute average revenue by taking the numberfor total revenue in the third column and dividing it by the quantity of outputin the first column. As we discussed in Chapter 14, average revenue alwaysequals the price of the good. This is true for monopolists as well as for competitivefirms.The last column of Table 15-1 computes the firm’s marginal revenue,the amountof revenue that the firm receives for each additional unit of output. We compute
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