Question

Question 1

In order for a monopolist to earn an economic profit in short-run equilibrium, marginal revenue must be equal to zero.

True

False

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Question 5

Which of the following is true for the monopolist?

1. Marginal revenue is less than the price charged.
2. Economic profit is possible in the long-run.
3. Profit maximizing or loss minimizing occurs when marginal revenue equals marginal cost.
4. All of the above.
5. None of the above.

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Question 12

1. An industry is said to be a natural monopoly when:
2. legal barriers limit entry into the market.
3. diseconomies of scale are present in the market.
4. the market demand for the product supplied by a firm is inelastic.
5. long-run average cost continues to decline as the quantity of output increases.

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Question 13

Pure economic profit must be at a maximum for a monopolist who has a level of output in which total revenue is at a maximum.

True

False

Answer 1

a) "False"

For the monopoly to make a profit the marginal cost and the marginal revenue are equal. it will not be equal to zero.

b) "D"

All the given statements are true, the monopolist marginal revenue will be less than the price charged, they can make profit in the long run and they can make a profit or loss at the profit maximising level.

c) "E"

long-run average cost continues to decline as the quantity of output increases.

d) "False"

it will be less as the price will drop to maximise the revenue.