Question

1. Briefly explain why the following statements are TRUE or FALSE:

   1. A monopolist produces the quantity at which MC = MR.

   2. A monopolist sets a price equal to MR.

   3. A monopolist faces a downward-sloping MR curve.

   4. A monopolist faces a perfectly elastic demand curve.

   5. A monopolist must lower price if it produces additional units.

   6. A monopolist is always able to price discriminate.

Answer 1

1) True

A monopolist produces the quantity at which MC = MR.

 

Explanation:

The monopoly profit-enhancing option would be to produce at a price where the minimum income is equal to the marginal cost: i.e., MR = MC. If the monopoly produces a lower value, then MR> MC at that product level, and the company can make a higher profit by increasing the product.

 

2) False

A monopolist sets a price equal to MR.

 

Explanation:

The main difference with a fully competitive firm is that in the case of total competition, the average income is equal to the value (MR = P), and for one person, the minimum income is not equal to the value, because changes in output are affected. number.

 

3) True

A monopolist faces a downward-sloping MR curve.

 

Explanation:

The monopolist is facing a downward spiral of demand due to price discrimination which means that the monopolist can only sell the extra value by lowering the price.

 

4) False

A monopolist faces a perfectly elastic demand curve.

 

Explanation:

A monopolist facing a curve of demand expands is often not true about a monopolist making a profit. This option is right because the monopolist that makes a profit is a company that charges different prices for different output productions in such a way that the curve of demand is reduced.

 

5) True

A monopolist must lower price if it produces additional units.

 

Explanation:

For one person, low income is less than the price. Because one owner has to lower the price on all units in order to sell more units, the lower income is less than the price.

 

6) False

A monopolist is always able to price discriminate.

 

Explanation:

The power to rule alone is not enough to allow a company to split prices.

Price discrimination is usually only achievable if the company offers different market segments at different prices and faces limited competition.

1) True

2) False

3) True

4) False

5) True

6) False