Question

A) If a firm is a price taker its marginal revenue is:

1. Constant
2. Decreasing as quantity produced increases
3. Increasing as quantity produced increases
4. Zero

B) If a non-price taking firm produces where demand is inelastic, marginal revenue will be...

​​

1. positive
2. zero
3. negative
4. imaginary

C) For non-price taking firms-- which of the following statements are true.

​​​​​​​​​​​​​​

1. The firms markup depends on the elasticity of demand for the firms product.
2. The firms marginal revenue decreases as output increases.
3. The firm's long run marginal cost is its supply curve.
4. All of the above are true
5. None of the above are true
6. Only A and B are true

Answer 1

a) "A"

If the firm is a price taker its marginal revenue will be constant and a straight line.

b) "C"

IF the demand is inelastic the marginal revenue will be negative.

c) "F"

Only A and B are true. A firms markup will depends in its goods elasticity and the marginal revenue decreases as output increases.