Economics For Today

10th Edition
Publisher: Cengage Learning
ISBN: 9781337613040



Economics For Today

10th Edition
Publisher: Cengage Learning
ISBN: 9781337613040
Chapter 9, Problem 3SQ
Textbook Problem

When marginal revenue is zero for a monopolist facing a downward-sloping straight-line demand curve, the price elasticity of demand is

  1. a. greater than 1.
  2. b. equal to 1.
  3. c. less than 2.
  4. d. equal to 0.

To determine

 The elasticity of demand when the monopolist fasces zero marginal revenue.

Explanation of Solution

The firms produce the goods and services that are demanded by the people in the economy. The production takes place after making use of the factors of production and that means there will be factor costs to the firm while making production. The market structure that is characterized by a single seller in the market who is the price maker and where there are strict entry restrictions into the market is known as the monopoly market.

Option (b):

A monopolist could only maximize his profit as long as the marginal revenue is positive. The marginal revenue of the monopolist is positive when the demand is elastic. When the demand is inelastic, the marginal revenue is negative and when the demand is unitary elastic, the marginal revenue is zero. Thus, option 'b' is correct...

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Chapter 9 Solutions

Economics For Today
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Ch. 9 - Make the unrealistic assumption that production is...Ch. 9 - Explain why a monopolist would never produce in...Ch. 9 - In each of the following cases, state whether the...Ch. 9 - Suppose the demand and cost curves for a...Ch. 9 - Which of the following constitute price...Ch. 9 - Suppose the candy bar industry approximates a...Ch. 9 - Name three places you frequent that use price...Ch. 9 - The monopolist faces a. a perfectly inelastic...Ch. 9 - To maximize its profit, a monopoly should choose a...Ch. 9 - When marginal revenue is zero for a monopolist...Ch. 9 - Both a perfectly competitive firm and a monopolist...Ch. 9 - Suppose a monopolists demand curve lies below its...Ch. 9 - Which of the following statements best describes...Ch. 9 - Which of the following is true for the monopolist?...Ch. 9 - Although a monopoly can charge any price it...Ch. 9 - As shown in Exhibit 11, the profit-maximizing...Ch. 9 - As shown in Exhibit 11, if the monopolist produces...Ch. 9 - As shown in Exhibit 11, the monopolists total cost...Ch. 9 - The profit-maximizing output for the monopolist in...Ch. 9 - Consider the monopolists profit maximizing output...Ch. 9 - As shown in Exhibit 11, the monopolists...Ch. 9 - Suppose a monopolist charges a price corresponding...Ch. 9 - The act of buying a commodity in one market at a...Ch. 9 - One necessary condition for effective price...Ch. 9 - An example of price discrimination is the price...Ch. 9 - Suppose a monopolist and a perfectly competitive...Ch. 9 - Suppose there are two markets for football games:...

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