Tag: economics

Questions Related to economics

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

The average revenue curve of a firm under pure monopoly will be a _______________.

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

  1. Straight line

  2. Vertical line

  3. Downwards slope

  4. Rectangular hyperbola

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Correct Option: C

Government can eliminate all monopoly profits by setting a price equal to ______________.

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

  1. Average variable cost

  2. Average cost

  3. Average fixed cost

  4. Marginal cost

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Correct Option: B
Explanation:

 The government requires the monopoly to set a price equal to average cost. That is, it requires the firm to choose an (output, price) pair for which AC is equal to AR. This regulation eliminates profit, but does not necessarily lead to an efficient outcome.

In monopolistic competition, the average revenue curve of the firm is ______________.

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

  1. less elastic

  2. more elastic

  3. unit elastic

  4. None of the above

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Correct Option: B
Explanation:

Average curve will be considerably more elastic  because the monopolistically competitive firm has less control over the price that it can charge for its output.