Question

QUESTION 36

1. All of the following are true regarding a monopolist's marginal revenue except which one? AND EXPLAIN

   		It is equal to the change in total revenue resulting from a change in quantity sold.
   		It is downward sloping.
   		It is equal to price for all units produced.
   		It is less than the price for all units produced.

QUESTION 37

1. TRUE/FALSE. EXPLAIN. A monopolist's marginal revenue is greater than the price for all units produced.

   True

   False

QUESTION 38

1. Cartels are unstable due to all of the following factors except which one? AND EXPLAIN

   		incentive for each firm to serve as the whistle-blower
   		entry of new firms into the market
   		trade groups
   		incentive to act in self-interest

QUESTION 40

1. In peak-load pricing, the short-run marginal cost is equal to the marginal cost of providing capacity. AND EXPLAIN

   True

   False

Answer 1

36. option 1 is true regarding MR. this is true for any marginal revenue curve. Basically this lines defines what marginal revenue is.

option 2 is true as well regarding MR. Monopolist faces downward sloping MR. In fact most market structures do, with an exception of perfect competition.

option 3 is not true about a monopolists's MR. A monopolist sets price at a level where MR=MC and P>MC. So this is the correct option for the question. Only in case of perfect competition, P=MR. 3rd option is correct.

option 4 is also true about MR. As monopolist sets P>MC where MC=MR, it means P>MR for every unit of output produced.

37. As already understood in the previous question, monopolist sets price at MR=MR and P>MC, so MR is less than P for every unit produced. So the statement is false.