Refer to the above graph for a monopolist in short-run equilibrium. The marginal revenue curve for a monopolist: At which of the following combinations of price and marginal revenue (P, MR) is the. 7. When marginal revenue is positive, demand is elastic; and when marginal revenue is negative, demand is inelastic. Marginal revenue is less than price. Patent. The monopolist is constrained by your willingness to pay the price it charges. The output level at which marginal revenue equals zero corresponds to unitary elasticity. This occurs at the quantity qu in the illustration. Course Hero is not sponsored or endorsed by any college or university. Constants in the equation are represented by a and b — a is the intercept of the demand curve (where the demand curve intersects the vertical axis) and b is the demand curve’s slope. A)$151 B)$141 C)$111 D)$161 11) 12)The table above shows the demand and total cost schedule for a monopolist hotel. Thus, as diamond prices increase, the quantity of diamonds consumers purchase will decrease. Because the monopolist’s demand curve is identical to the market demand curve, the monopolist can sell an additional unit of output only by lowering the product’s price.   Privacy What price should the monopolist charge if it is a single-price monopoly? Marginal revenue is related to the price elasticity of demand — the responsiveness of quantity demanded to a change in price. Course Hero, Inc. Thus, for a linear demand curve, the marginal revenue curve starts at the same intercept as the demand curve, but its slope is twice as steep. Managerial Economics: The Relationship between Demand, Price, and Revenue in a Monopoly. So, if the monopolist wants to sell more product, it must lower price as indicated by the market demand curve. This explains why: A monopolist will find that marginal revenue: is sometimes greater and sometimes less than price. The monopolist that is non-discriminating must decrease price on all units of a product. The inverse relationship between price and quantity demanded is the critical element in monopoly price setting. marginal revenue always lies behind the demand curve,and when demand increases marginal revenue also increases.demand curve is used to determine price of a commodity. The supply curve for a pure monopolist: A. 20) A) A B) B C) C D) D Answer: B 21) The marginal revenue curve for a monopolist: 21) 22) At which of the following combinations of price and marginal revenue (P, MR) is the price elasticity of demand greater than 1? If the monopolist charges too high of a price, nobody wants to buy its product. This monopolist has total fored cost equal to area: A. BEFC B. ABED C. ADFC D. OCFQ 9. When marginal revenue is positive, demand is elastic; and when marginal revenue is negative, demand is inelastic. Indiana University, South Bend • ECON E103, Copyright © 2020. Because a single firm provides the entire quantity of the commodity in the market, the demand for the monopolist’s product, represented by a lower-case d, is the same as the market demand, represented by a capital D. The market demand possesses the usual characteristics; an inverse relationship between price and quantity demanded and changing price elasticity of demand along the demand curve. BC. 11)The table above shows the demand and total cost schedule for a monopolist hotel. D. Refer to the above graph. For example, economists consider De Beers a resource monopoly because it effectively controls the world’s supply of diamonds. This monopolist has total fored cost equal to area: A. BEFC B. ABED C. ADFC D. OCFQ 9. Assuming no price discrimination (charging different customers different prices for the same good), this lower price is charged for all units of the commodity sold. Which of the four shows the correct relationship between demand and marginal revenue? An exclusive legal right as sole producer for 20 years granted to an inventor of a product is called a. A. This preview shows page 50 - 54 out of 92 pages.. 35. A. Marginal revenue is less than average revenue. CD. where P is the good’s price in dollars and q is the quantity demanded. Refer To The Above Graph. The ultimate source of power in a market, even a monopolistic market, is the consumer, who still responds to price by changing his demand level.

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