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    Econ Homework #7 ANSWER KEY

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    Gielarmi Julie Requina
    This document contains a 10 question multiple choice quiz about monopoly economics. Specifically: 1) Question 1 asks why a monopoly's marginal revenue curve is steeper than its average revenue curve. The answer is that the monopoly must lower price to sell another unit. 2) Question 2 asks about properties of marginal revenue and total revenue for a monopoly facing a linear demand curve. The answer is that marginal revenue and total revenue are both zero at the same level of output. 3) Question 3 asks about the relationship between total revenue and elasticity of demand for a monopoly facing a linear demand curve. The answer is that total revenue is increasing when elasticity of demand is numerically less than one.

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    Econ Homework #7 ANSWER KEY

    Uploaded by

    Gielarmi Julie Requina
    66 views2 pages
    This document contains a 10 question multiple choice quiz about monopoly economics. Specifically: 1) Question 1 asks why a monopoly's marginal revenue curve is steeper than its average revenue curve. The answer is that the monopoly must lower price to sell another unit. 2) Question 2 asks about properties of marginal revenue and total revenue for a monopoly facing a linear demand curve. The answer is that marginal revenue and total revenue are both zero at the same level of output. 3) Question 3 asks about the relationship between total revenue and elasticity of demand for a monopoly facing a linear demand curve. The answer is that total revenue is increasing when elasticity of demand is numerically less than one.

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    This document contains a 10 question multiple choice quiz about monopoly economics. Specifically: 1) Question 1 asks why a monopoly's marginal revenue curve is steeper than its average revenue curve. The answer is that the monopoly must lower price to sell another unit. 2) Question 2 asks about properties of marginal revenue and total revenue for a monopoly facing a linear demand curve. The answer is that marginal revenue and total revenue are both zero at the same level of output. 3) Question 3 asks about the relationship between total revenue and elasticity of demand for a monopoly facing a linear demand curve. The answer is that total revenue is increasing when elasticity of demand is numerically less than one.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    66 views2 pages

    Econ Homework #7 ANSWER KEY

    Uploaded by

    Gielarmi Julie Requina
    This document contains a 10 question multiple choice quiz about monopoly economics. Specifically: 1) Question 1 asks why a monopoly's marginal revenue curve is steeper than its average revenue curve. The answer is that the monopoly must lower price to sell another unit. 2) Question 2 asks about properties of marginal revenue and total revenue for a monopoly facing a linear demand curve. The answer is that marginal revenue and total revenue are both zero at the same level of output. 3) Question 3 asks about the relationship between total revenue and elasticity of demand for a monopoly facing a linear demand curve. The answer is that total revenue is increasing when elasticity of demand is numerically less than one.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    Econ 11 Recit, Homework #7 (Gideon P.

    Carnaje)
    Monopoly

    1 A monopoly’s marginal revenue curve is steeper than its average revenue curve because
    a) marginal revenue is exactly half average revenue.
    b) the monopoly must lower price to sell another unit.
    c) monopolies have economies of scale.
    d) marginal cost is below price for a monopolist.

    2 For a monopoly facing a linear demand curve,


    a) marginal revenue and total revenue are both zero at the same level of output.
    b) average revenue is zero when total revenue is at its maximum.
    c) marginal revenue is half of average revenue.
    d) marginal revenue is zero when total revenue is at its maximum.

    3 For a monopoly facing a linear demand curve,


    a) total revenue is increasing when elasticity of demand is numerically greater than one.
    b) total revenue is increasing when elasticity of demand is numerically less than one.
    c) total revenue is negative when elasticity of demand is numerically greater than one.
    d) total revenue is negative when elasticity of demand is numerically less than one.

    4 At short-run equilibrium a profit-maximizing monopoly will equate


    a) marginal cost and price.
    b) marginal cost and marginal revenue.
    c) marginal revenue and average total cost.
    d) price and average total cost.

    5 A profit-maximizing monopolist will always produce


    a) where demand is elastic.
    b) where demand is inelastic.
    c) where demand is exactly unit-elastic.
    d) on the lower half of a linear demand curve.

    6 A profit-maximizing multi-plant monopolist will adjust its output between its plants so as to
    a) equate marginal cost in each plant to marginal revenue.
    b) minimise the total cost of production.
    c) produce the same amount in each plant.
    d) operate each plant at the minimum point of its average cost curve.

    7 Which of the following is not a reason why monopoly is allocatively inefficient?


    a) It maximizes producer surplus only.
    b) The loss to consumers (relative to competition) is greater than the gain to producers.
    c) There is a deadweight loss.
    d) One firm controls the market.

    8 Barriers to entry are ——— if a monopoly firm’s profits are to persist in the long run.
    a) essential
    b) desirable
    c) unnecessary
    d) disadvantageous

    9 Examples of natural and policy-created barriers to entry respectively are


    a) economies of scale and brand-name advertising.
    b) economies of scale and high set-up costs.
    c) government licensing requirements and high set-up costs.
    d) government licensing requirements and economies of scale.

    10 For a monopoly facing a linear demand curve, the absolute value of elasticity is unity
    a) when total revenue is maximized.
    b) when marginal revenue is positive.
    c) when average revenue is zero.
    d) for none of the above.

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