24.2 The Demand Curve a Monopolist Faces

Both perfect competitors and monopolists must lower prices to sell more output. A. False B. True

A. False

The demand curve faced by the monopolist A. has greater price elasticity of demand as close substitutes for the monopoly product are developed. B. is always inelastic where MR​ = MC and profits are maximized. C. has lower price elasticity of demand as close substitutes for the monopoly product are developed. D. None of the above.

A. has greater price elasticity of demand as close substitutes for the monopoly product are developed.

As the number of imperfect substitutes for a monopoly​ firm's product​ increases, the price elasticity of demand A. increases. B. decreases. C. cannot be determined. D. approaches zero.

A. increases

The demand curve faced by a purely monopolistic seller is A. perfectly​ elastic, whereas that facing the purely competitive firm is downward sloping. B. downward​ sloping, whereas that facing the purely competitive firm is perfectly elastic. C. perfectly​ inelastic, whereas that facing the purely competitive firm is perfectly elastic. D. downward​ sloping, whereas that facing the purely competitive firm is perfectly inelastic.

B. downward​ sloping, whereas that facing the purely competitive firm is perfectly elastic.

The better the substitutes for a monopoly​ firm's product, the A. smaller the price elasticity of demand. B. greater the price elasticity of demand. C. effect on the price elasticity of demand is indeterminate. D. faster the price elasticity of demand approaches zero.

B. greater the price elasticity of demand.

The demand curve faced by the monopolist A. has smaller price elasticity of demand as close substitutes for the monopoly product are developed. B. has greater price elasticity of demand as close substitutes for the monopoly product are developed. C. is perfectly inelastic. D. is perfectly elastic.

B. has greater price elasticity of demand as close substitutes for the monopoly product are developed.

For a​ monopoly, A. price equals marginal revenue only. B. price equals average revenue only. C. price differs from both average revenue and marginal revenue. D. price equals both average revenue and marginal revenue.

B. price equals average revenue only

Marginal revenue for a monopolist is A. downward sloping and always equal to price. B. horizontal, just like for the perfectly competitive firm. C. downward sloping and always less than price. D. downward sloping and always greater than price.

C. downward sloping and always less than price.

The demand curve for the monopolist is​ ________ and the demand curve for the perfect competitor is​ ________. A. upward​ sloping; downward sloping B. horizontal; vertical C. downward​ sloping; horizontal D. horizontal; downward sloping

C. downward​ sloping; horizontal

The marginal revenue curve for a perfectly competitive firm is​ _________ while the marginal revenue curve of the monopolist is​ _________. A. ​horizontal, upward sloping B. downward​ sloping, upward sloping C. horizontal, downward sloping D. downward​ sloping, horizontal

C. horizontal, downward sloping

A monopolist can sell 30 toys per day for $8.00 each. To sell 31 toys per​ day, the price must be cut to $7.00. The marginal revenue of the 31st toy​ is: A. −$24.00. B. $7.00. C. −$23.00. D. $23.50.

C. −$23.00.

For a​ monopolist, price is​ ________ marginal revenue. A. less than B. equal to C. unrelated to D. greater than

D. greater than

The demand curve of the monopolist A. is perfectly inelastic. B. is the same as a​ price-taking firm. C. is perfectly elastic. D. is the same as the industry demand curve.

D. is the same as the industry demand curve

A profit maximizing monopolist will never operate in a price range in which price elasticity of demand is inelastic. True False

True

The monopolist estimates its marginal revenue​ curve, where marginal revenue is defined as the ______ in ______ revenues due to a​ one-unit change in quantity sold. For the perfect​ competitor, price equals ______ revenue equals average revenue. For the​ monopolist, ______ revenue is always less than price because price must be reduced on all units to sell more. The price ______ of demand for the monopolist depends on the number and similarity of substitutes. The more numerous the imperfect​ substitutes, the greater the price ______ of the​ monopolist's demand curve.

change total marginal marginal elasticity elasticity

A monopolist can charge any price it wants without experiencing a change in quantity demanded. A. False B. True

A. False

You observe that the revenue of a monopolist varies directly with changes in price. This firm _______ maximizing its economic profits because a​ profit-maximizing monopolist will never operate in a price range in which demand is A. elastic since this is range in which revenues are falling and the firm could raise revenues by raising the price into the inelastic range of demand. B. elastic since this is range in which revenues are falling and the firm could raise revenues by lowering the price into the inelastic range of demand. C. inelastic since this is range in which revenues are falling and the firm could raise revenues by raising the price into the elastic range of demand. D. inelastic since this is range in which revenues are falling and the firm could raise revenues by lowering the price into the elastic range of demand.

is not C. inelastic since this is range in which revenues are falling and the firm could raise revenues by raising the price into the elastic range of demand.