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# Which of the following is true of marginal revenue for a monopolist

### Customer Question

Which of the following is true of marginal revenue for a
monopolist that charges a single price?
a) P= MR because there are no close substitutes for the
monopolist's product
b) P > MR because the monopolist must decrease price on all
units sold in order to sell an additional unit
c) P < MR because the monopolist must decrease price on all
units sold in order to sell an additional unit.
d) AR = MR because there are no close substitutes for the
monopolist's product
e) P = MR only at the profit-maximizing quantity.

Suppose that a monopolist must choose between two points on
its demand curve; it can sell 100 units for \$3, or it can sell 160
for \$2. Which of the following is true?
a) the monopolist is facing elastic demand
b) the monopolist is facing unit elastic demand
c) the monopolist is facing inelastic demand
d) the monopolist is facing perfectly elastic demand
e) the elasticity of the demand curve the monopolist faces
cannot be determined with the information given

If a monopolist is producing a rate of output at which market
demand is inelastic,
a) it may or may not be maximizing its short-run profit
b) reducing output would reduce both total revenue and total
cost
c) reducing output would increase both total revenue and total
cost
d) reducing output would increase total revenue and reduce total
cost
e) increasing output will increase its short-run economic profit

Which of the following does a monopoly control, that a perfectly
competitive firm does not control?
a) how much to produce
b) technology
c) what price to charge
d) how many inputs to use
e) plant size

Which of the following is true at the profit-maximizing quantity
for both a perfectly competitive firm and a monopoly?
a) price equals marginal cost
b) price is greater than marginal cost
c) marginal revenue equals marginal cost
d) marginal revenue is less than marginal cost
e) marginal revenue is greater than average revenue

A monopolist earning short-run economic profit determines that
at its present level of output, marginal revenue is \$23 and
marginal cost is \$30. Which of the following should the firm do
to increase profit?
a) raise price and lower output
b) lower price and lower output
c) raise price and raise output
d) lower price and raise output
e) lower output but leave price unchanged

If a nondiscriminating monopolist is operating at an output level
where price equals average total cost, we can conclude that
a) economic profit is \$0
b) the firm is not maximizing profit
c) the firm should go out of business in the long run
d) the firm is not earning its normal profit
e) the firm should shut down in the short run

Which of the following FALSELY describes a nondiscriminating
monopolist at profit maximization?
a) price is greater than marginal cost
b) economic profit is always positive
c) marginal revenue is equal to marginal cost
d) marginal revenue will typically be less than price
e) average total cost will not be at a minimum
Submitted: 12 years ago.
Category: Homework
Expert:  skywalker replied 12 years ago.
Which of the following is true of marginal revenue for a
monopolist that charges a single price?
a) P= MR because there are no close substitutes for the
monopolist's product
b) P > MR because the monopolist must decrease price on all
units sold in order to sell an additional unit
c) P < MR because the monopolist must decrease price on all
units sold in order to sell an additional unit.
d) AR = MR because there are no close substitutes for the
monopolist's product
e) P = MR only at the profit-maximizing quantity.

The monopoly always produces above the Marginal revenue
MR= P(1+1/N)
N is the elasticity and less than zero
So that we know that P>Mr and when P>MR, in order to sell all goods monopoly must decrease its price. So that the answer is b

Suppose that a monopolist must choose between two points on
its demand curve; it can sell 100 units for \$3, or it can sell 160
for \$2. Which of the following is true?
a) the monopolist is facing elastic demand
b) the monopolist is facing unit elastic demand
c) the monopolist is facing inelastic demand
d) the monopolist is facing perfectly elastic demand
e) the elasticity of the demand curve the monopolist faces
cannot be determined with the information given

The elasticity is       (160-100)/100
-----------------=1.2
(3-2)/2
The elasticity is more than 1 so that demand is elastic.

If a monopolist is producing a rate of output at which market
demand is inelastic,
a) it may or may not be maximizing its short-run profit
b) reducing output would reduce both total revenue and total
cost
c) reducing output would increase both total revenue and total
cost
d) reducing output would increase total revenue and reduce total
cost
e) increasing output will increase its short-run economic profit
producing in the inelastic part of demand curve will make a negative marginal revenue. So that firm does nor produce in the inelastic part. It reduces the output so that total revenue increases and also total cost decreases

Which of the following does a monopoly control, that a perfectly
competitive firm does not control?
a) how much to produce
b) technology
c) what price to charge
d) how many inputs to use
e) plant size

A monopoly is price setter , it can determine the prices on the other hand a perfect competitive firm is a price taker it does not any control for the prices
So that the answer is C

Which of the following is true at the profit-maximizing quantity
for both a perfectly competitive firm and a monopoly?
a) price equals marginal cost
b) price is greater than marginal cost
c) marginal revenue equals marginal cost
d) marginal revenue is less than marginal cost
e) marginal revenue is greater than average revenue

A firm whether perfect competitive or monopoly always sets it optimum output where the Marginal revenue is equal to marginal cost

A monopolist earning short-run economic profit determines that
at its present level of output, marginal revenue is \$23 and
marginal cost is \$30. Which of the following should the firm do
to increase profit?
a) raise price and lower output
b) lower price and lower output
c) raise price and raise output
d) lower price and raise output
e) lower output but leave price unchanged

Marginal revenue is less than Marginal cost
We know that marginal revenue is a decreasing function with output and Marginal cost is an increasing function with output. In order to increase profit firm will decrease the output the marginal revenue increases and marginal cost will decrease.
If the output decreases of course prices goes up
So that the answer will be A

If a non discriminating monopolist is operating at an output level
where price equals average total cost, we can conclude that
a) economic profit is \$0
b) the firm is not maximizing profit
c) the firm should go out of business in the long run
d) the firm is not earning its normal profit
e) the firm should shut down in the short run

when price is equal to ATC then if we multiply both sides with Q
Then P*Q= ATC*Q
We know PQ= total revenue
ATC*Q= total cost
Then Total revenue= Total cost
The firm has a zero accounting profit we can decide that the accounting profit of a firm should be bigger than zero so that it is not earning its normal profit
Economic profit can not be determined in here
Firm does not shut down or go out of business in the monopoly ( free entry and exit is not allowed)

Which of the following FALSELY describes a nondiscriminating
monopolist at profit maximization?
a) price is greater than marginal cost
b) economic profit is always positive
c) marginal revenue is equal to marginal cost
d) marginal revenue will typically be less than price
e) average total cost will not be at a minimum

For am monopoly at profit maximization level
Marginal revenue= Marginal Cost
Price is bigger than marginal cost
And it is not necessary that ATC will be at minimum
We know that accounting profit is bigger than zero but it is not necessary that economic profit is bigger than zero
It can be less than zero