Answer to Question #52942 in Microeconomics for Yana

Question

1. Which of the following is true for a pure monopolist?
a. The firm has a perfectly elastic demand curve.
b. The firm will always earn an economic profit.
c. The demand curve is above the marginal revenue curve.
d. None of these is true.
2. Which of the following best explains why the monopolist's marginal revenue is less than the selling price?
a. To sell more units, the monopolist must reduce price on all units sold.
b. As the monopolist expands output, the average total cost will decline.
c. The monopolist charges each consumer the highest possible price.
d. When a firm has a monopoly, consumers have no choice other than to pay the price set by
the monopolist.
3. Graphically, the marginal revenue curve of a monopolist:
a. will sometimes lie below the demand curve of the monopolist.
b. will always lie below the demand curve of the monopolist.
c. is the same as the demand curve of the monopolist.
d. will equal -1 when the elasticity of demand is unitary.

Answer 1

1. Which of the following is true for a pure monopolist?
c. The demand curve is above the marginal revenue curve.
2. Which of the following best explains why the monopolist's marginal revenue is less than the selling price?
c. The monopolist charges each consumer the highest possible price.
3. Graphically, the marginal revenue curve of a monopolist:
b. will always lie below the demand curve of the monopolist.