Tag: liquidity preference and profit

Questions Related to liquidity preference and profit

Price discrimination will be profitable only if the elasticity of demand in different markets in which the total market has been divided is ____________.

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

  1. uniform

  2. different

  3. less

  4. zero

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Correct Option: B
Explanation:

Price discrimination will be profitable only if the elasticity of demand in different markets in which the total market has been divided is different, since, that would give the firm an opportunity to charge differing prices and generate higher revenues.

The concept of marginal cost is closely related with which of the following?

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

  1. Variable cost

  2. Fixed cost

  3. Opportunity cost

  4. Economic cost

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Correct Option: A

In a non-competitive market, when the demand of the product increases and the product price increases _______________.

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

  1. the marginal revenue curve will shift to the right

  2. the marginal revenue curve will shift to the left

  3. the firm will move up the marginal revenue curve and hire fewer units of the input

  4. the firm will move down the marginal revenuencurve and hire fewer units of the input

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Correct Option: A
Explanation:

The marginal revenues curve follows from the demand curve/average revenue curve (it is twice as steep as the demand curve), thus if the demand curve shifts upwards the marginal revenue curve will also shift upwards. 

The supply curve for the monopolist __________.

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

  1. does not exist

  2. is represented by the marginal cost curve above the average total cost curve

  3. is represented by the marginal cost curve above the average variable cost curve

  4. none of the above

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Correct Option: A

Marginal revenue for a monopolist is equal to ________________________.

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

  1. the increased revenue from the sale of an additional unit less the loss the revenue from selling previous unit at a lower price

  2. the change in revenue resulting from a one unit change in output

  3. the change in revenue divided by the change in output

  4. all of the above

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Correct Option: D

In imperfect competition, the average revenue and marginal revenue curves are ________.

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

  1. different

  2. same

  3. identical

  4. perpendicular

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Correct Option: A

Which of the following is true regarding monopolistic competition?

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

  1. $AR=MR$

  2. $MR=0$

  3. $AR< MR$

  4. $AR>MR$

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Correct Option: D

When AR is falling, MR will be ___________.

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

  1. equal to AR

  2. less than AR

  3. more than AR

  4. either more or equal to AR

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Correct Option: B

Under monopoly, MR can be negative only when:

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

  1. AR is increasing

  2. AR is decreasing

  3. AR is constant

  4. AR is zero

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Correct Option: B

The strength of a monopolist may be assessed by ____________.

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

  1. the size of his total revenue

  2. the gap between AR and MR

  3. the size of consumer's surplus accruing to him

  4. the long-term price of his product

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Correct Option: B