Question

1.For a linear demand curve that is downward sloping, the marginal revenue curve

Select one:

a. will be to the left of the demand curve and twice as steep.

b. will be to the right of the demand curve and twice as steep.

c. will be to the left of the demand curve and half as steep.

d. will be the same as the demand curve.

2.The demand curve that a monopolist faces is:

Select one:

a. not affected by changes in the prices of other goods.

b. the market demand curve.

c. the same as the demand curve that faces a perfectly competitive firm.

d. generally flatter than the demand curve that faces a perfectly competitive firm.

3.

The Herfindahl-Hirschman (HH) Index is used to

Select one:

a. measure the degree of market concentration in an industry.

b. None of the above

c. measure the degree of nonprice competition.

d. measure the extent of price leadership.

4.

The kinked demand curve model best reflects

Select one:

a. mutual interdependence among sellers.

b. price rigidities in oligopolistic markets.

c. a game theory approach to price-output decisions.

d. All of the above

5.

When a monopolist sells two units of output its total revenues are $100. When the monopolist sells three units of output its total revenues are $120. When the monopolist sells three units of output, the price per unit is:

Select one:

a. $33.33.

b. $6.67.

c. $40.

d. $20.

6.

When a monopolist sells two units of output its total revenues are $100. When the monopolist sells three units of output, its price per unit is $35. The monopolist's marginal revenue from selling the third unit of output is:

Select one:

a. $105.

b. $35.

c. $5.

d. $33.33.

Answer 1

1. For a linear demand curve that is downward sloping ,the marginal revenue curve will be to the left of the demand curve and twice as steep. Hence, option (A) is correct.

2. The demand curve that a monopolist faces is the market demand curve because there is only seller. Hence, option (B) is correct.

3. The Herfindahl-Hirschman (HH) Index is used to measure the degree of market concentration in an industry. Hence, option (A) is correct.

4.The kinked demand curve model best reflects mutual interdependence among sellers , price rigidities in oligopolistic markets, a game theory approach to price-output decisions .Hence ,option (D) is correct.

5. When monopolist sells two units , total revenue = $100 .It implies price = 100/2 = $50.

And when monopolist sells three units, total revenue = $120.It implies price = 120/3 = $ 40 . The monopolist sells three units of output ,the price per units is $40. Hence option (C) is correct.

5. When monopolist sells two units of output ,total revenue = $100.

When monopolist sells three units , it's price per unit = $35. It means total revenue = $(3)(35)= $105 .

The monopolist's marginal revenue from selling the third unit of output = $(105-100) = $5 .

Hence, option(C) is correct.