Question

17.    The demand curve faced by a monopolist is
    a.    negatively sloped
    b.    perfectly elastic
    c.    perfectly inelastic
    d.    unit elastic at all points


18.    If a perfectly competitive firm is producing at less than the profit-maximizing output level, we can conclude that
    a.    price must exceed average total cost
    b.    price must exceed marginal revenue
    c.    marginal revenue must exceed marginal cost    
    d.    marginal cost must exceed price

19.    Perfectly competitive firms may earn positive economic profit
    a.    in the long run but not the short run
    b.    in the short run but not the long run
    c.    in the long run and the short run

    d.     never


20.    Suppose a monopolist could sell 30 units of output for $300 total revenue or 31 units of output for $279. Then, the marginal revenue from the thirty-first unit is
    a.    $9
    b.    -$1
    c.    -$0.68, approximately
    d.    -$21

Answer 1

Q17
ANswer
Option a
the demand curve is downward sloping because the demand curve is same as the industry demand curve.

Q18
Answer
Option c
the firm produces at MC=P=MR
the P and MR are same and horizontal whereas the MC is upward sloping if the output is less than the profit-maximizing output means the MC is lower than MR.
Q19
Answer
Option b
the market have free entry and exit so if there is profit in short run then new firms will enter the industry up to the profit is zero and vice versa

Q20
Option d
MR of n th unit =TR of n units -TR of n-1 units
=279-300
=-21

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