Problem: Koel is the single producer of home air conditioners in its rural market. The firm's monthly demand is described by the equation P = 5000 - 5Q, where P is the price and Q is the quantity of units sold. Which of the following must be true of Koel?
- An increase in price decreases the quantity sold.
- It is a natural monopoly.
- A decrease in price decreases the quantity sold.
- Higher levels of output bring in increasingly lower total revenue if demand is elastic.
- Maintaining the current price decreases the quantity sold over time.