ECON 260 a Its marginal revenue curve is below its demand curve. b. When it prod
ID: 1114614 • Letter: E
Question
ECON 260 a Its marginal revenue curve is below its demand curve. b. When it produces an extra unit of output, it must lower its price on all of its production c. It faces a downward-sloping demand curve. d. It can charge any price as it wishes 15. The change in total revenue thst resaults from a one-uni increase in quantity sold is marginal revenue. Bly this definition,tho marginal revenue of a monopolist is: a. Less than price because a monopolist is a price taker b. Above price because the firm is a price setter d. Less than price because to sell more output the firm must reduce the price on all units sold. c. Always equal to price. 16 If'a firm can change the market price by altering its output, the it has market power but must be aware of what price that consumers are willingness and able to pay. Then, a fundamental source of monopoly market power arises from a. availability of "free" natural resources, such as water or air b. perfectly elastic demand. perfectly inclastic demand. dbarricrs to entry 17. Which of the following is NOT true for a monopoly? a. Facing a horizontal demand curve. b Maximizing profit by prodac its output whereat MR ,c. c. It can use its market power to charge higher prices than a competitive industry. d. It is a price semer 18. Angelo is a wholesale meatball distributor. He sells his meatballs to all the finest Italian restaurants in town. Nobody can make meatballs like Angelo. As a result, his is the only business in town that sells meatballs to restauraents. Assuming that Angelo is maximizing his profit, which of the following statenments is true? a. Meatball prices will be less than marginal cost. b. Meatball prices will equal marginal cost c. Meatball prices will exceed marginal cost. d. Meatball prices will be a function of supply and demand and will therefore oscillate around marginal costs Figure #21 Quantity (enits per bur) 19. In Figure 2, the profit-maximizing condition of a monopolist is to produce following units of output and to charge the following price respectively a. 3 units and $10.b.4 units and $9. c.5 units and $8. d. 6 units and $7. 20. In Figure 2, profit per unit for a profit-maximizing monopolist is: a $3. c. $7 d. S9. 21. In Figure 2, i this industry is competitive, the profit-maximizing level of output and price are respectively a. 3 units and S1O. .4 units and $9. c5 units and $8. d. 6 units and $7, RMUNNICHAExplanation / Answer
15. Under monopoloy the monopolist charges at price which buyers are willing to pay at profit maximizing quantity.. and it is not equal to price. Marginal revenue of a monopolist is less than the price because to sell more the monopolist has to reduce the price at all units sold. option d is correct.
16. The source of monopoly power arises from barriers to entry. option d
17. Monopoly faces downward slopping demand curve hence option a is correct answer.
18. Market price will exceed marginal cost.
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