40. Marginal revenue is equal to: A. total revenue divided by its output. B. mar

Question

40. Marginal revenue is equal to: A. total revenue divided by its output. B. marginal cost C. the change in total revenue associated with a change in quantity D. the change in total profits associated with a change in quantity. 41. A perfectly competitive firm's marginal revenue is: A. less than the selling price. B. greater than the selling price. C. equal to the selling price. D. sometimes below and sometimes above the selling price. 42. As long as marginal cost is below marginal revenue, a perfectly competitive firm should: A. increase production. B. hold production constant. C. decrease production. D. reconsider past production decisions. 43. Refer to the graph shown. To maximize profit, this perfectly competitive firm should produce: marginal $700 R $8.50 cost 15.00 demand 3 00 $2.00 0 10 20 30 50 6070 Quantity A. 30 units of output. B. 40 units of output. C. 50 units of output. D. 60 units of output. 44. A monopoly firm is different from a competitive firm in that: A. there are many substitutes for a monopolist's product whereas there are no substitutes for a competitive firm's product. B. a monopolist's demand curve is perfectly inelastic whereas a competitive firm's demand curve is perfectly elastic. C. a monopolist can influence market price whereas a competitive firm cannot. D. a competitive firm has a U-shaped average cost curve whereas a m onopolist does not.

Explanation / Answer

Q40

Answer

Option C

MR of n th unit=(TR of n units -TR of p units)/(n-p)...................n>p

=change in revenue/change in quantity

Q41

Answer

C

the demand curve is horizontal so the MR=MC

Q42

Answer

Option A

the firm produces at MR=MC and the MR is constant and MC is increasing

Q43

Answer

Option C

the firm produces at MC=P

where Q=50 units

Q44

Option c

the monopolist is only one in the market with no close substitute for the product so it can influence the price but perfectly competitive market have many firms and entry is free so there is no power over price.

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