What is generally the case for a monopolist's average revenue? Select one: O a. It is equal to marginal revenue. O b. It is equal to the price of its product. O c. It is less than the price of its product. O d. It is greater than the price of its product. O

What is generally the case for a monopolist's average revenue? Select one: O a. It is equal to marginal revenue. O b. It is equal to the price of its product. O c. It is less than the price of its product. O d. It is greater than the price of its product. O

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter25: Monopoly

Section: Chapter Questions

Problem 14E

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Question

What is generally the case for a monopolist's average
revenue?
Select one:
O a. It is equal to marginal revenue.
O b. It is equal to the price of its product.
O c. It is less than the price of its product.
O d. It is greater than the price of its product.

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Draw a monopolists demand curve, marginal revenue, and marginal cost curves. Identify the monopolists profit-maximizing output level. Now, think about a slightly higher level of output (sayQ0+1). According to the graph, is there any consumer willing to pay more than the marginal cost of that new level of output? If so, what does this mean?
Imagine that you ale managing a small firm and thinking about entering the market of a monopolist. The monopolist is currently charging a high price, and you have calculated that you can make a nice profit charging 10 less than the monopolist. Before you go ahead and challenge the monopolist, what possibility should you consider for how the monopolist might react?
How can a monopolist identify the profit-maximizing level of output if it knows its total revenue and total cost curves?
How can a monopolist identify the profit-maximizing level of output if it knows its total revenue and total cost curves? A. The profit-maximizing level of output can be determined by comparing marginal revenue and total cost. B. Cannot be determined from this information C. The profit-maximizing level of output will be where there is the greatest difference between total revenue and total cost. O D. The profit-maximizing level of output will be where there is the smallest difference between total revenue and total cost.
es The following table contains demand and cost data for a monopolist. Complete the table by filling in the columns for total revenue, marginal revenue, and marginal cost. Answer these three questions: (a) What output will the monopolist produce? (b) What price will the monopolist charge? (c) What total profit will the monopolist receive at the profit-maximizing level of output? Quantity Price Total revenue Marginal revenue Total cost Marginal cost O $34 $ 1 32 30 28 26 24 22 20 18 16 14 234 5678 9 10 $ $20 36 46 50 54 56 64 80 100 128 160 $
If a monopolist with significant barriers to entry is making positive economic profit in the short run, what do we expect to happen as the market transitions to the long run? O The profit will increase since the monopolist has no competition, they can just raise the price to earn higher profits. O It will decrease as positive economic profit signals new firms to enter the market, increasing the market supply, and lowering the prevailing price. O It will increase, in the long run firms will drop out the market increasing the monopolists dominance in the marketplace. O The profit will stay the same, strong barriers to entry prevent new competition.
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Suppose a monopolist faces the demand curve and cost curves shown below. ATC Demand MR Quantity FIGURE 10 - 4 Refer to Figure 10 – 4. If this single - price monopolist is producing at the profit - maximizing level of output, the total profit is represented by the area O A. OP aQo O B. PabP2- O C. OP,fQ0- O D. P3ceP2 O E. OP,bQo
Suppose a monopolist faces the demand curve and cost curves shown on the right. If the monopolist is practicing perfect price discrimination and is maximizing its profits, the total revenue is represented by the area OA. OP ₂bQ₂ OB. OP 5bQ₂ OC. OP ₂aQ OD. OP,dQ,. O E. OP₂CQ 10 P5 aaaa P4 P3 Dollars P₂ P₁ Por CA MC/ 'b de ATC QjQ₁ Q₂ Qz Quantity Demand NI MR Q4 Q5 11 OU
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