Question

In: Economics

1.A monopolist maximizes profit at the output rate where its total revenue equals total cost. True...

1.A monopolist maximizes profit at the output rate where its total revenue equals total cost.

True

False

2. To maximize profit, the perfectly competitive firm charges a price equal to __________ while the monopolist charges a price __________.

marginal revenue; equal to marginal cost

marginal cost; greater than marginal cost

marginal revenue; less than marginal revenue

average total cost; greater than average total cost

3.Compared to the perfectly competitive firm, the monopolist faces a demand curve that is ___________________ elastic because there are ______________ substitutes for the product produced by the monopolist.

less; fewer

less; more

more; fewer

more; more

Solutions

Expert Solution

1 - False

The profit maximising level is where the MR = MC and not the TR = TC

2 - Option B

Marginal cost , greater than marginal cost.

This is because the monopolist aims to earn the positive economic profits whereas competitive firm earns only normal profits.

3 - Option A

Less , fewer

The monopolist has downward sloping demand curve which is less elastic . It has lesser substitute of the products which makes the demand curve less elastic.

Rahul Sunny answered 1 year ago

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