26. When a competitive firm triples the amount of output it sells, what is the r

Question

26. When a competitive firm triples the amount of output it sells, what is the result? a. Its total revenue triples. b. Its average revenue triples. c. Its marginal revenue triples. d. Its selling price triples. Figure 4 Average Total Cost Output Refer to Figure 4. The shape of the average total cost curve reveals information about the nature of the barrier to entry that might exist in a monopoly market. Which of the following monopoly types best coincides with the figure? 27. a. a natural monopoly b. a dynamic monopoly c. a government-created monopoly d. ownership of a key resource by a single firm 28. Which of the following scenarios best represents a monopoly situation? Bill and Tom work separately from one another but both sell a very rare form of the a. b. Tim owns a fishing tackle shop in Vancouver, in which he sells the top-of-the-line c. Bob owns the only grocery store in a small community that lies 300 kilometers from the d. Robert is the only seller of a specific cola soft drink, but Erin sells one that is a close same diamond. They are the only sellers of this type of diamond in town. fishing equipment. nearest city. substitute.

Explanation / Answer

26.

Since the competitive firm is price taker, so price is same for every quantity of goods sold.

So if quantity sold triple then the total revenue will also triple.

Hence option a is the correct answer.

27.

Since the average total cost of natural monopolist declines as production increases. So for new firm which wants to enter, it is a barrier because new firm cannot compete with the existing firm and new firm ATC will be high so for the new firm there will be not profit.

Hence it can be said that this ATC graph is of natural monopoly.

Hence option a is the correct answer.

28.

Since in case of monopoly there is only one seller or producer in the market which supplies the goods or services.

Since Bob owns the only geocery shop in a small community that lies 300 km from the nearest city. So it is example of monopoly because it can charge as much as he wants.

Hence option c is the correct answer.

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