Robert Graham, PhD, is a Professor of Economics with an extensive administrative background, serving for three-and-a-half years as the Interim Vice President and Dean of Academic Affairs at Hanover College. Which of the four shows the correct relationship between demand and marginal revenue? So, if the monopolist wants to sell more product, it must lower price as indicated by the market demand curve. In order to sell more of its product, the monopolist must lower its price, not only for the additional unit but for every other unit as well. BC. 7. Marginal revenue — the change in total revenue — is below the demand curve. The output level at which marginal revenue equals zero corresponds to unitary elasticity. A. Marginal revenue is less than price. If the government regulated the monopoly and made the firm set a fair-return price, what price and quantity levels would we observe in the short run? What price should the monopolist charge if it is a single-price monopoly? If you compare the marginal revenue equation with the demand equation, you see that both equations have an intercept represented by a. If the monopolist charges too high of a price, nobody wants to buy its product. Is the portion of the marginal cost curve that lies above the average variable cost curve B. is perfectly price-elastic at the market price C. Is upsloping across all relevant ranges of output D. Does not exist because there is no unique relationship between price and quantity supplied. What is the marginal revenue from renting out the fifth room each night? Constants in the equation are represented by a and b — a is the intercept of the demand curve (where the demand curve intersects the vertical axis) and b is the demand curve’s slope. A B.B 8. Which of the graphs below shows the correct relationship between demand and, 23 out of 23 people found this document helpful, Which of the graphs below shows the correct relationship between demand and marginal. Marginal revenue — the change in total revenue — is below the demand curve. CD. The supply curve for a pure monopolist: A. 20) A) A B) B C) C D) D Answer: B 21) The marginal revenue curve for a monopolist: 21) 22) At which of the following combinations of price and marginal revenue (P, MR) is the price elasticity of demand greater than 1? Refer To The Above Graph. 22) 5 Course Hero is not sponsored or endorsed by any college or university. The marginal revenue curve for a monopolist: At which of the following combinations of price and marginal revenue (P, MR) is the. P3 and Q2. A. 20) Which of the graphs below shows the correct relationship between demand and marginal revenue? © 2003-2020 Chegg Inc. All rights reserved. The monopolist’s pricing decision is subject to the constraint imposed by consumer demand. The monopolist that is non-discriminating must decrease price on all units of a product. Specifically, the steeper the demand curve is, the more a producer must lower his price to increase the amount that … A)\$151 B)\$141 C)\$111 D)\$161 11) 12)The table above shows the demand and total cost schedule for a monopolist hotel. Refer to the above graph for a pure monopoly. Assuming no price discrimination (charging different customers different prices for the same good), this lower price is charged for all units of the commodity sold. The slope of the demand equation is represented by –b, while the slope of the marginal revenue equation is –2b.   Terms. This preview shows page 50 - 54 out of 92 pages.. 35. The monopolist is constrained by your willingness to pay the price it charges. This explains why: A monopolist will find that marginal revenue: is sometimes greater and sometimes less than price. Because the monopolist’s demand curve is identical to the market demand curve, the monopolist can sell an additional unit of output only by lowering the product’s price. Marginal revenue is related to the price elasticity of demand — the responsiveness of quantity demanded to a change in price. Thus, for a linear demand curve, the marginal revenue curve starts at the same intercept as the demand curve, but its slope is twice as steep. When marginal revenue is positive, demand is elastic; and when marginal revenue is negative, demand is inelastic. View desktop site, 7. With a natural monopoly, the fair return price: Is allocatively inefficient; the socially optimal price is allocatively efficient. An exclusive legal right as sole producer for 20 years granted to an inventor of a product is called a. Answer to Which of the above shows the correct relationship between demand and marginal revenue?A. where P is the good’s price in dollars and q is the quantity demanded. A B.B 8. The demand curve is important in understanding marginal revenue because it shows how much a producer has to lower his price to sell one more of an item. Licenses. If a non-discriminating imperfectly competitive firm is selling its 100. For example, economists consider De Beers a resource monopoly because it effectively controls the world’s supply of diamonds.

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