Chp 11 - Monopoly

Question 1

Equation for revenue

Answer 1

R=pq

Question 2

Equation for marginal revenue

Answer 2

MR=(ΔR / Δq)

Question 3

If a firm sells exactly one more unit, Δq=1. What is marginal revenue equation?

Answer 3

MR=ΔR

Question 4

Define monopoly -

Answer 4

the only supplier of a good for which there is no close substitute

Question 5

How do all firms maximize their profits?

Answer 5

Setting marginal revenue equal to marginal cost

MR = MC

Question 6

T/F: The marginal revenue curve is horizontal for competitive firms and downward sloping for monopolies.

Answer 6

True

Question 7

T/F: A monopolies marginal revenue curve lies above the demand curve at every positive quantity.

Answer 7

False, it lies below.

Question 8

Equation for a monopoly’s marginal revenue

Answer 8

MR = p + (Δp / ΔQ) * Q

Question 9

A monopoly faces a __a__ demand curve. Its marginal revenue curve __b__ its demand curve at any positive quantity.

a) downward-sloping OR horizontal OR upward sloping
b) lies above OR lies below

Answer 9

a) downward-sloping
b) lies below