Question

In: Economics

1. A monopolist maximizes profits at the output at which A) total revenue is at its...

1. A monopolist maximizes profits at the output at which

A) total revenue is at its greatest, assuming that the firm has both fixed and variable costs.

B) price equals marginal cost.

C) price exceeds marginal cost by the greatest amount.

D) none of the above

2. Which of the following is true of marginal revenue earned by a monopolist that charges a single price to all its consumers?

A) Marginal revenue earned by a monopolist is equal to the average cost incurred by it.

B) Marginal revenue earned by a monopolist is more than the price of its product.

C) Marginal revenue earned by a monopolist is less than the price of its product.

D) Marginal revenue earned by a monopolist is equal to the average revenue earned by it.

E) Marginal revenue earned by a monopolist is equal to price of its product.

3. For a monopolist, if price is above average total cost, the monopolist is

A) earning an economic profit.

B) taking an economic loss.

c) minimizing total fixed costs.

d) minimizing total variable costs.

Expert Solution

1) A monopolist sets MR=MC for profit maximization

so, none of the above is correct

2) The MR is always less than the price

option(C)

3) If price is greater than ATC then the firm earns positive economic profits

option(A)

Rahul Sunny answered 2 years ago

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