True/False Indicate whether the sentence or statement is true or false. 15. When
ID: 1107010 • Letter: T
Question
True/False Indicate whether the sentence or statement is true or false. 15. When a monopoly charges a higher price, fewer of its goods are sold. 16. Average revenue for a monopoly is the total revenue divided by the quantity produced 17. For a monopoly, marginal revenue is often greater than the price they charge for their good. 18. It doesn't make sense to talk about a monopolist's supply curve. 19. By offering lower prices to customers who buy a large quantity, a monopoly is price discriminating. 20. The amount of power that a monopoly has is a function of whether there are close substitutes for its product.Explanation / Answer
15). True.
The monopolist can only sell more product if it lowers its prices, because it's demand curve slopes downward as demand curves generally do. Demand only increases with decreasing prices, but the marginal revenue gained by selling one additional unit will always be less than the price of that unit because the monopolist will have to sell all of its units at the lower price.
16). True.
The average revenue in a monopoly is indeed total revenue divided by total quantity produced. However this is in contrast with competitive market, where average revenue = marginal revenue = total cost/quantity
17) False.
For a monopoly, marginal revenue is always less than the price except for the first unit. For example - A monoply sells first unit at $100, and sells 2 units at $90. The marginal in this case is $80, however the price necessary to sell these units is $100(less by 10 per piece).
18). True.
A monopolist does not have a supply curve. It sets prices only at which the profits will be maximized, which will then determine what the supply curve will be.
19). True.
Price discrimination is the concept of charging different prices to different consumers. A monopolist often discriminates among its consumers in order to maximise its revenue.
20) True
A monopolist is a person who sells products that are unique in the market. If the products sold by a monopolist has substitutes, then the monopolist will enjoy less power in the market since the consumers can choose other product if there is a decline in the quality or rise in the price of monopolist's product.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.