Tag: liquidity preference and profit

Questions Related to liquidity preference and profit

Imperfect monopoly is a single firm industry where ___________________.

economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

  1. The cross elasticity in the market is zero

  2. The cross elasticity of demand between the product of the firm and that of other commodities in the market is small, though it is above zero

  3. The price elasticity to the market is zero

  4. The income elasticity to the market is zero

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Correct Option: B
Explanation:

In economic theory, imperfect competition is a type of market structure showing some but not all features of competitive markets. Forms of imperfect competition include: Monopolistic competition: A situation in which many firms with slightly different products compete. The cross elasticity of demand between the product of the firm and that of other commodities in the market is small, though it is above zero

Price discrimination is not profitable when _________________.

economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

  1. The demand curves are iso-elastic

  2. The demand curves are elastic

  3. The supply curves are iso-elastic

  4. The supply curves are elastic

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Correct Option: A

Relationship between revenue and elasticity of demand can be given by __________.

economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

  1. $ MR = AR \left ( 1-\frac{e}{p} \right )$

  2. $ MR = AR \left ( 1-\frac{1}{e} \right )$

  3. $ AR = MR \left ( 1-\frac{1}{e} \right )$

  4. $ AR > MR \left ( 1-\frac{1}{e} \right )$

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Correct Option: B

When Marginal revenue is zero?

economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

  1. Total revenue is also zero

  2. Total revenue is the maximum

  3. Total revenue is the minimum

  4. Total revenue starts increasing sharply

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Correct Option: B

Average revenue of a monopolist firm is _________.

economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

  1. always more than the marginal revenue

  2. always less than the marginal revenue

  3. equal to marginal revenue

  4. any of the above three possible

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Correct Option: A

If the demand elasticity for the monopolistic product is $1.25$ and the marginal revenue is $20$, what is the price of the product?

economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

  1. $25$

  2. $20$

  3. $22$

  4. $18$

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Correct Option: A

Individual buyer and seller is a price taker in which market structure?

economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

  1. Monopoly

  2. Perfect competition

  3. Discriminating monopoly

  4. Oligopoly

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Correct Option: B

In imperfect competition, the MR curve will lie ______________.

economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

  1. Below the AR curve

  2. Above the MR curve

  3. Below the AC curve

  4. Above the AC curve

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Correct Option: A
Explanation:

A firm under imperfect competition such as under monopoly can sell more only by lowering its price. Therefore, the average curve is downward sloping and its corresponding marginal revenue curve lies below it.

Hence, A is the correct option.

Choose the correct answer.
The change in TR due to the sale of an additional units is called?

economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

  1. Total Revenue

  2. Average Revenue

  3. Marginal Revenue

  4. Revenue

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Correct Option: C
Explanation:

 Marginal revenue is the change in total revenue which results from the sale of one more or one less unit of output.

Under monopoly ________________.

economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

  1. The AR being steeper than the MR curve

  2. The MR being steeper than the AR curve

  3. MR = AR

  4. AC = AR

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Correct Option: B