1) Suppose a single-price monopolist is selling more than one unit of a good for a...

1) Suppose a single-price monopolist is selling more than one unit of a good for a price of $19.95. Of the following choices, which is true?

The marginal revenue of that unit must be less than $19.95
The marginal revenue of that unit must be $19.95
The marginal cost of that unit must be $19.95
The average cost of that unit must be $19.95.

2) BenFrank LLC is a monopolist that can sell 8,000 units of SKU972 at a price of $47 each. Raising the price to $50 reduces the quantity demanded by 3,000 units. What is the decrease in total revenue that results from this price change? (state your answer as a positive number) ________

3) Tango Company is a price-discriminating monopoly. Its customers in Houston are charged $30/unit, yet it charges customers in New Orleans $25 per unit. Tango Comapny

believes that the demand of individuals in New Orleans is relatively inelastic.
believes that the demand of individuals in New Orleans is relatively elastic.
wants to shift the demand of individuals in New Orleans.
cares about the well-being of the individuals in New Orleans.

4) For a monopolist who practices perfect price discrimination

there is no way to define marginal revenue.
the demand curve is less than the marginal revenue curve.
the demand curve is the marginal revenue curve.
the demand curve is greater than the marginal revenue curve.
none of the above

Solutions

Expert Solution

Ans1) the correct option is a) The marginal revenue of that unit must be less than $19.95

ans2) $ 126,000

initial total revenue = 8000* 47 = 376,000

new total revenue = 5000 * 50 = 250,000

Change in total revenue = 376,000 - 250,000 = 126,000

and3) the correct option is b) believes that the demand of individuals in New Orleans is relatively elastic.

ans4) the correct option is d) the demand curve is greater than the marginal revenue curve.

Rahul Sunny answered 1 year ago

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