7. A monopolist sells 100 units at $10 per unit and 90 units at $15 per unit. Th
ID: 1198187 • Letter: 7
Question
7. A monopolist sells 100 units at $10 per unit and 90 units at $15 per unit. The marginal revenue from the tenth unit is ________. $1000 $1350 $100 $350
8. Which of the following correctly completes this statement? The monopolist's marginal revenue will be ________. greater than price less than price equal to price greater than total revenues
9. When MR = MC, ________. marginal profit is maximized total profit is maximized marginal profit is positive total profit is zero
10. In the short run, a firm should shut down if it cannot ________. make normal profits make economic profits cover its variable costs cover its fixed costs
11. Which of the following industries is most likely to represent the monopolistic competition market structure? Automobile Tobacco Restaurant Farm equipment
12. Which of the following represents a good example of an oligopoly? The agriculture industry A public utility The automobile industry The restaurant industry
13. Mutual interdependence means that ________. all firms are price takers each firm sets its own price based on its anticipated reaction by its competitors all firms collaborate to establish one price all firms are free to enter or leave the market
14. The Herfindahl-Hirschman Index (HHI) is used to measure ________. the degree of non-price competition the degree of market concentration in an industry the extent of price leadership None of the above
15. The existence of a kinked demand curve under oligopoly conditions may result in ________. price flexibility price rigidity competitive pricing None of the above. .
16. Porter's “Five Forces Model” is based on ________. the laws of supply and demand the law of diminishing returns the Structure-Conduct-Performance model the key factors affecting demand
17. In the long run, the most helpful action that a monopolistically competitive firm can take to maintain its economic profit is to ________. continue its efforts to differentiate its product raise its price lower its price do nothing, because it will inevitably experience a decline in profits
18. The demand curve, which assumes that competitors will follow price decreases but not price increases, is called ________. an industry demand curve an inelastic demand curve a kinked demand curve a competitive demand curve
19. The four-firm concentration ratio ________. indicates the total profitability among the top four firms in an industry is an indicator of the degree of monopolistic competition indicates the presence and intensity of an oligopoly market is used by the government as a basis for anti-trust cases
20.When a company is faced by a kinked demand curve, the marginal revenue curve will be ________. upward sloping horizontal zero at the quantity produced discontinuous
Explanation / Answer
(7) $350
Marginal revenue = Change in total revenue / Change in output
= [(100 x $10) - (90 x $15)] = $(1,000 - 1,350) = $350
(8) Less than price
Monopolist equates MR with MC. Since MR lies below demand curve, Price > MR, so MR < price.
(9) Marginal profit is maximized.
Marginal profit = MR - MC, which is maximized when MR = MC.
(10) Firm will shut down if it cannot cover its variable costs with revenue.
NOTE: As per Chegg Answering Policy, first 4 questions are answered.
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