1) For a monopoly earning positive economic profits at the profit-maximizing out
ID: 1162732 • Letter: 1
Question
1) For a monopoly earning positive economic profits at the profit-maximizing output level, all of the following are true EXCEPT A) P > MR. B) P = MR. C) P > ATC. D) P > MC.
2)A monopolist's marginal revenue curve is A) higher than the monopolist's demand curve. B) below the firm's demand curve. C) the same as a perfectly competitive firm's marginal revenue curve. D) a horizontal line at the market price.
3) The monopolist is a A) price searcher who tries to find the rate of output that maximizes price. B) price taker who tries to find the profit-maximizing rate of output. C) price searcher who tries to find the profit-maximizing price-output combination. D) price taker who tries to find the profit-maximizing price.
Explanation / Answer
a) "B"
When a monopoly is making a positive profit the price can never be equal to Marginal revenue.
b) "B"
For a monopoly, the production will be at a point where the marginal cost curve will be below the demand curve or the AR curve.
c) "A"
A monopoly produces the output at the point where the MR and MC curve meet. And the price is set according to the output produced.
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