A monopolist will fix the equilibrium output of his product where the elasticity of his average revenue curve is:
Less than one
Equal to one
Greater than one
Less than one
Correct Answer :
C. Greater than one
AR curve of monopolist is a downward sloping curve .This is also called demand curve for monopolist showing different level of elasticities of demand. At the mid point of the AR curve, elasticity of demand is equal to one and above the mid point, elasticity is greater than one and below the mid point elasticity is less than one .A monopolist fix the amount of his product at a level where the elasticity of his AR curve (Demand Curve) is greater than one. It causes total revenue to increase because here demand is elastic and a small decline in price will bring a large increase in total revenue.}
Related Questions
We can find total utility by:
Multiplying the number of unit by its marginal utility
Adding up the marginal utility of all units
Multiplying price by number of units
None of the above
Economies of large-scale production:
Lead to greater specialization
Offsets the effects of the law the law of comparative advantage
Lead to greater diversification of individual production
Cause firms to use more capital and less labor
In the case of a normal goods, the income effect:
Is always equal to the substitution effect
Completely offsets the substitution effect
Partially offsets the substitution effect
Reinforces the substitution effect
A monopolist has control over the price he charges for his product. He will be able to maximize his profit by:
Lowering the price, if the demand curve is elastic
Lowering the price, if the demand curve is inelastic
Rising the price, if the demand curve is elastic
None of the above is applicable
Even in the long-run equilibrium, the pure monopolist can make abnormal profits because of:
Advertising
His low LAC
Blocked entry
High price he charges
Any straight line supply which cuts the x-axis will have:
Zero elasticity
An elasticity greater than one
Unitary elasticity of supply
An elasticity less than one
When income of the consumer increases then demand curve of an inferior good:
Shifts rightward
Shifts leftward
Does not shift
None of the above
Income-elasticity of demand is expressed as:
% change in quantity demanded % change in income
% change in income % change in quantity demanded
Change in income Change in quantity demanded
None of the above
Identify the coefficient of price-elasticity of demand when the percentage increase in the quantity of a commodity demanded is smaller than the percentage fall in its price:
Equal to one
Greater than one
Smaller than one
Zero
Labor theory was firstly rejected by:
Adam Smith
Karl Marx
Ricardo
Pigou
In economics, Externality means:
An externality is a cost or benefit which is not transmitted through prices
An externality is a cost or benefit which is transmitted through prices
An externality is a production received through external resources
None of the above
The products, under monopolistic competition are differentiated, yet they are:
Complements
Close substitutes
Both a and b
None of the above
In the case of a giffen good, the income effect:
Is equal to the substitution effect
More than offsets the substitution effect
Reinforces the substitution effect
Only partially offsets the substitution effect
On all points of budget (price) line:
Total expenditures increases
Total expenditures decreases
Total expenditures are zero
Total expenditures remain same
In the short-run, in which one of the following situations would a competitive seller close down (shut-down)?
When he cannot produce at an economic profit
When price falls short of average variable cost at every level of output
When price falls short of average fixed cost at every level of output
When price falls short of average total cost at every level of output
In the long run:
All factors can be used in different proportions
Management can be re-organized
A firm can experience returns to scale
All of the above
Which industries spend a relatively large share of their revenue on research and development in order to keep up with their competitors?
Grocery stores
High-Tech industries
Automobiles
Construction
Economics is a:
Exact science
Inexact science
Pure science
All of the above
Consumers Surplus can also be defined as:
Extra price benefits
Shortage of quantity
Surplus of quantity
Difference between actual price and potential price
The name of the system of direct exchange is:
Price system
Barter system
Islamic economic system
Socialistic system
If Cobb-Douglas production function is homogeneous of degree greater than one (n>1), then it shows:
Constant returns to scale
Increasing returns to scale
Decreasing returns to scale
None of the above
Who is the author of Trade Cycle ?
R.Nurkse
R.C.Mathews
W.A.Lewis
K.N.Raj
A straight line, downward-sloping demand curve implies that, as price falls, the elasticity of demand:
Increases
Decreases
Remains the same
Is zero
The external economies of scale experienced by a firm include the:
Growth of firms processing its waste materials
Development of research bureau serving the industry
Supply of suitable skilled labor in the area
All of the above
At a point below the middle of a straight line demand curve, elasticity of demand is:
Less than one
Equal to one
More than one
Equal to infinity
Under monopolistic competition, in long-run there is:
Ban on exit
Ban on entry
Free entry
Free entry and exit
Price leadership is associated with:
Collusive oligopoly
Non-collusive oligopoly
Cartel
Perfect competition
In monopoly and perfect competition, TC curves are:
Different
Similar
Opposite
None of the above
Least cost combination of two factor inputs is achieved at a point where:
Budget line cuts the isoquant
Budget line is below the isoquant
Budget line is tangent with isoquant
None of the above
Who wrote An Introduction to Positive Economics?
R.G.Lipsey
Paul.A.Samuelson
E.D.Domar
J.M.Keynes