Curve MR is horizontal because: a. product price falls as output increases. b. the law of...
Question:
Curve MR is horizontal because:
a. product price falls as output increases.
b. the law of diminishing marginal utility is at work.
c. the market demand for this product is perfectly elastic.
d. the firm is a price taker.
FIGURE 10.3 Short-run profit maximization for a purely competitive firm. The MR = MC output enables the purely competitive firm to maximize profits or to minimize losses. In this case MR (= P in pure competition) and MC are equal at an output Q of 9 units. There, P exceeds the average total cost A = $97.78, so the firm realizes an economic profit of P - A per unit. The total economic profit is represented by the green rectangle and is 9 (P - A).
Market Competition:
Market competition exists when two or more firms compete for customers. The competition will drive innovation and reduce the overall price of goods as distributors attempt to gain market share. Limitations on market entry or government interventions can impact market equilibrium resulting in inefficiencies and higher prices to consumers.
Answer and Explanation:
Become a Study.com member to unlock this answer! Create your account
View this answerThe correct answer is d. the firm is a price taker. Curve MR is horizontal because the firm is a price taker.
A firm is a price taker if it has no...
See full answer below.
Ask a question
Our experts can answer your tough homework and study questions.
Ask a question Ask a questionSearch Answers
Learn more about this topic:
Get access to this video and our entire Q&A library
What Is a Fixed-Price Contract? - Definition & Examples
from
Chapter 14 / Lesson 3
26K
Learn the fixed-price definition and understand how fixed-price contracts work. See fixed-price contract examples and the types, such as firm fixed-price contracts.
Related to this Question
- 1. The marginal revenue curve of a perfectly competitive firm A. lies below the firm's demand curve. B. increases at an increasing rate as output expands. C. is horizontal at the market price. D. is downward-sloping because price must be reduced to sell m
- The marginal revenue curve faced by a perfectly competitive firm: a. lies below the firm's demand curve b. is downward sloping because price must be reduced to sell more output c. is horizontal at the market price d. has all of these characteristics
- The demand curve facing a monopolist is: a) identical to the marginal cost curve. b) downward sloping and above the marginal revenue curve. c) downward sloping and below the marginal revenue curve. d) horizontal at the market price.
- The marginal revenue curve for a single-price monopoly: a. is upward sloping. b. is horizontal. c. lies below the market demand curve. d. lies above the market demand curve. Compared to a competitive
- A monopolist's marginal revenue curve is: a. The same as a perfectly competitive firm's marginal revenue curve, b. Higher than the monopolist's demand curve, c. Below the firm's demand curve, d. A horizontal line at the market price.
- On a labor market graph, a firm's demand for labor is: a. the wage rate. b. the marginal revenue product curve. c. the marginal product curve. d. indeterminant.
- 1) The pure monopolist's demand curve is relatively elastic: A) in the price range where marginal revenue is positive. B) at all points where the demand curve lies above the horizontal axis. C) in t
- A firm's short-run demand curve for labor is: A. upward sloping. B. the marginal revenue product curve. C. the downward-sloping portion of the marginal cost curve. D. the marginal cost divided by price.
- On a labor market graph, a firm's demand for labor is a. the wage rate. b. the marginal revenue product curve. c. the marginal product curve. d. indeterminate.
- The marginal revenue curve for a single-price monopoly A. lies below its demand curve. B. is horizontal. C. lies above its demand curve. D. coincides with its demand curve.
- The firm's demand curve for labor is a. the marginal revenue product curve for labor. b. the marginal physical product curve for labor multiplied by the price of labor. c. the marginal physical pro
- The relationship between a monopolistic competitor's marginal revenue curve and its demand curve is that the a. two curves coincide and are horizontal at the market price. b. marginal revenue curve li
- A monopsonist's marginal factor cost curve lies above its supply curve because the firm must: a. increase the price of its product to sell more. b. lower the price of its product to sell more. c. increase the wage rate to hire more labor. d. lower the wag
- For a firm in a perfectly competitive industry: a) marginal revenue and product price are equal at every level of output. b) the price elasticity of demand is zero. c) the demand curve is unitary elastic throughout. d) more output can be sold only if the
- A firm's demand curve for labor is: A. the downward-sloping portion of its marginal revenue product curve. B. the upward-sloping portion of its marginal revenue product curve. C. horizontal for the firm in perfect competition. D. the downward-sloping port
- The demand curve for labor is derived from: a. the marginal costs of production b. the marginal product of labor c. the supply curve for labor d. the supply curve for the product produced by the labor
- Unlike a perfectly competitive firm, a monopoly: A. will charge the highest price it can on the demand curve. B. has a horizontal marginal revenue curve. C. has an upward sloping total revenue curve. D. faces a downward sloping demand curve. E. faces a ho
- The firm's demand curve for labor is: a. the demand curve for the good produced divided by the price of the good. b. the marginal revenue product curve for labor. c. the marginal physical product curve for labor divided by the good. d. the marginal physi
- For a profit maximizing firm in the factor market, the MRP curve and the demand curve: a) are equivalent. b) both slope upward. c) both vertical in the short run. d) are horizontal in competitive market. e) are horizontal in an imperfect market.
- A monopsonist's marginal factor cost curve lies above its supply curve because the firm must a. increase the price of its product to sell more. b. lower the price of its product to sell more. c. increase the wage rate to hire more labor. d. lower the
- In pure competition: a) the optimal price-output solution occurs at the point where marginal revenue is equal to price. b) a firm's demand curve is represented by a horizontal line. c) a firm is a price-taker since the products of every producer are perf
- The long-run market supply curve in a competitive market will: a) always be horizontal. b) be the portion of the MC that lies above the minimum of AVC for the marginal firm. c) typically be more elastic than the short-run supply curve. d) be above the
- A monopolist charging one price faces a downward-sloping demand curve. At its current level of output, the firm has a MR of $10 and MC of $6. If its MC is upward sloping, the firm: a. is producing its profit-maximizing level of output b. could increase it
- A monopolist charging one price faces a downward sloping demand curve. At its current level of output, the firm has a MR of $10, an MC of $6. If its MC is upward sloping, the firm A) is producing its profit-maximizing level of output. B) could increase it
- A monopsonist's marginal factor cost curve lies above its supply curve because the firm must: a. lower the factor price to hire more. b. increase the price of its product to sell more. c. increase the factor price to hire more. d. lower the product pri
- In the short run, a monopolistically competitive firm: a. produces the amount of output for which the price equals its marginal cost b. faces a horizontal demand curve for each output c. produces an amount of output for which its marginal cost is greater
- Which of the following is a characteristic of a competitive price-taker market? a) Profit maximizing firms in the market will expand output until price equals average variable cost. b) The market demand curve for the product is a horizontal line. c) There
- In a perfectly competitive market, an individual firm faces a demand curve that: a. is downward sloping. b. lies above the marginal revenue curve. c. is horizontal at the equilibrium price. d. is perfectly inelastic. e. is upward sloping.
- The price searcher's marginal revenue curve lies below the demand curve because _____. a. the monopoly is not an efficient producer b. as the monopolist increases output, the price falls c. there is no account of implicit costs d. the monopolist's deman
- 1. How is the marginal product curve of labor related to the marginal cost curve of the firm? a. When marginal product is rising, marginal cost is rising. b. When marginal product is rising, margina
- Along a downward-sloping monopoly demand curve: a. marginal revenue is greater than price. b. elasticity of demand is constant. c. marginal revenue decreases when the price decreases. d. marginal revenue is equal to zero when the price is equal to zero. e
- Is a firm's marginal revenue product of labor curve its demand for labor curve or supply of labor curve?
- The industry supply curve is derived through the horizontal summation of firm: a. Average cost curves. b. Marginal revenue curves. c. Marginal cost curves. d. Demand curves.
- The price searcher's marginal revenue curve lies below the demand curve because: a. the monopoly is not an efficient producer. b. as the monopolist increases output, the price falls. c. there is no account of implicit costs. d. the monopolist's demand cur
- A firm's supply curve is the same as: 1) the upward-sloping portion of the marginal product curve. 2) the upward-sloping portion of the marginal cost curve. 3) the marginal cost curve above the average total cost curve. 4) the marginal cost curve above th
- An increase in the demand for a firm's product will increase the: a. value of the marginal product but not the firm's demand for labor. b. firm's demand for labor but not the value of the marginal product. c. marginal revenue product but not the firm's
- If a firm has no market power, the firm's: a. demand curve will be perfectly inelastic. b. ATC curve will be below the AVC curve. c. demand curve and marginal revenue curve will be the same. d. price cannot exceed the ATC.
- Assuming a perfectly competitive labor market, a firm's demand curve for labor would be derived from its marginal A. cost curve. B. revenue product curve. C. utility curve. D. revenue curve.
- The difference between a perfectly competitive firm and a monopolistically competitive firm is that a monopolistically competitive firm faces a: a. horizontal demand curve and price equals marginal cost in equilibrium. b. horizontal demand curve and price
- The marginal revenue product of labor for a firm: A. will decrease if the price of the firm's output increases. B. is the firm's demand curve for labor. C. will increase if the firm hires more labor (in the relevant region of its labor demand curve).
- The marginal revenue product of labor for a firm: A. will decrease if the price of the firm's output increases. B. is the firm's demand curve for labor. C. will increase if the firm hires more labor (in the relevant region of its labor demand curve). D
- A monopolist faces a demand curve P = 50 - 5Q where P is the product price and Q is the output. The monopolists cost function is C(Q) = 10Q. What are the monopolist's profit maximizing price, output, and profit? What are the consumer surplus and dead-weig
- As the price of a good fluctuates, a profit-maximizing firm will expand or contract production along its: a. average cost curve b. average product curve c. marginal cost curve d. marginal product curve
- In the competitive model, the short-run supply curve a firm is its marginal cost curve (above minimum average variable cost) and the market supply curve is the horizontal summation of those marginal c
- The short-run demand curve of labor for a firm in any type of market for its output coincides with: a. the upward-sloping portion of the marginal revenue product curve. b. the downward-sloping portion of the marginal revenue product curve. c. the downw
- A monopoly firm expands its output and lowers its price. The firm finds that its total revenue falls. Hence, the firm is producing in the A. inelastic range of its supply curve. B. elastic range of its supply curve. C. elastic range of its demand curve. D
- The labor demand curve is based on the firm's: a. average cost curve. b. marginal cost curve. c. average revenue curve. d. marginal revenue product curve. e. marginal product curve.
- The shape and/or slope of the marginal revenue curve under monopolistic competition, assuming a linear market demand, is: A.) horizontal B.) vertical C.) U-shaped D.) upward-sloping E.) downward-slopi
- If the price of labor is constant and a firm experiences diminishing marginal product, then it's _______. (a) marginal costs increase (b) fixed costs increase (c) marginal costs decrease (d) total costs decrease.
- For a monopoly, the industry demand curve is the firm's A. profit function. B. marginal revenue curve. C. supply curve. D. demand curve.
- The upward-sloping portion of a firm's marginal cost curve is the firm's: a. marginal revenue b. supply curve c. total cost curve d. marginal benefit curve e. total product curve
- For a firm selling its product in a perfectly competitive market, the demand curve for a factor of production is downward sloping because a. of the diminishing marginal product of the factor b. to s
- A monopoly's inverse demand curve is given by P = 200 - 5Q. The marginal cost of producing the product is $50. What is the profit maximizing price and output for the product? a. P = $150, Q = 10 b. P = $125, Q = 15 c. P = $50, Q =10 d. P = $50, Q = 30
- The marginal revenue lies {Blank} the demand curve because there is a(n) {Blank} effect whenever the price is lowered. a. above; price b. below; price c. below; output d. above; output e. on; price
- A profit maximizing monopoly never produces an output in the ___ range of its ___ curve. a. inelastic; demand b. unit elastic; marginal revenue c. inelastic; supply d. elastic; supply
- Holding all else constant, a decrease in the market demand for a product in a competitive market would cause: a. the average total cost curve of the firms to decrease. b. an increase in the price a firm could charge for the product. c. the marginal cos
- The marginal revenue of a non-price-discriminating monopolist lies below the demand curve because a) the demand curve is unit elastic. b) the monopolist must lower the price on all units sold in order to sell additional units. c) the monopolist is a price
- Firm X is a monopolist that faces market demand with elasticity equal to -3, and Firm X's marginal price cost of output is $24/unit. Use the mark-up formula to find Firm X's profit-maximizing.
- With perfect price discrimination, the marginal revenue curve: a. Is below the demand curve, b. Is above the demand curve, c. Is equal to the demand curve, d. Is horizontal.
- A monopsonist's marginal factor cost (MFC) curve lies above its supply curve because the firm must a. lower the factor price to hire more. b. increase the price of its product to sell more. c. increase the factor price to hire more. d. lower the produ
- The Marginal Revenue (MR) curve for a competitive price-searcher firm: A. Will appear below the firm's Demand curve. B. Will appear above the firm's Demand curve. C. Is perfectly inelastic at the ma
- In market A, a firm with market power faces an inverse demand curve of P = 10 - Q and a marginal cost that is constant at $2. In market B, a firm with market power faces an inverse demand curve of P = 8 - 0.75Q and a marginal cost of $2. Producer surplus
- Market price is $50. The firm's marginal cost curve is given by MC = 10 + 2Q. a. Find the profit-maximizing output for the firm. b. At this output, is the firm making a profit?
- The value of the marginal product curve slopes _________ due to _______________. a) downward, diminishing marginal product b) downward, increasing marginal product c) downward, constant wages d) upward, increasing marginal product
- For a perfectly competitive firm, the marginal revenue is always A. below the firm's demand curve. B. equal to the market price. C. equal to marginal cost. D. declining.
- If a firm is a perfect competitor, then: A. its marginal cost will exceed marginal revenue at the optimal level of output. B. the demand curve for its product is perfectly elastic. C. it can independently set the price of the product it sells without re
- Suppose your firm faces a demand curve of P = 90 - 0.30Q and the marginal cost of production is $10 per unit. 1. Find the profit-maximizing output and price. 2. Is this outcome on the elastic, inelastic, or unitary elastic part of the demand curve?
- When the marginal revenue curve is drawn for a monopolist, the curve: a) is above the monopolist's demand curve initially and then falls below the demand curve. b) is above the monopolist's demand curve for all output levels. c) is equal to the monopolist
- Suppose your firm faces a demand curve of (P = 90 - 0.30Q) and the marginal cost of production is $10/unit. Find the profit-maximizing output and price. Is this outcome on the elastic, inelastic, or unitary elastic part of the demand curve? What are your
- If the price of labor is constant and a firm experiences diminishing marginal product, its: a. marginal costs will increase. b. marginal costs will decrease. c. fixed costs will increase. d. total costs will decrease.
- When marginal revenue is zero for a monopolist facing a downward slope straight-line demand curve, the price elasticity of demand is ____. A) equal to 1 B) greater than 1 C) less than 2 D) equal to 0
- The marginal cost curve slopes downward at low outputs because of _____. The marginal cost curve eventually slopes upward because of _____. A) the law of diminishing returns; increasing average fixed cost. B) the law of diminishing returns; greater specia
- The monopolist's input demand curve is the: a. marginal physical product curve b. marginal revenue product curve c. marginal revenue curve d. marginal factor cost curve e. none of the above
- 1. A Profit-maximizing monopolist faces a downward-sloping demand curve that has a constant elasticity of -3. The firm finds it optimal to charge a price of $12 for its output. What is its marginal co
- When marginal revenue is zero for a monopolist facing a downward-sloping straight-line demand curve, the price elasticity of demand is: a. greater than 1. b. equal to 1. c. less than 2. d. equal to 0.
- The accompanying figure depicts a generalized downward-sloping market demand (D) curve for a product. It also shows the firm's relevant marginal revenue (MR) curve and marginal cost (MC) curve. Use this figure to answer the question below. For a monopoly
- Just like a monopolist, a monopolistically competitive firm: A. cannot sell additional units of output without lowering the price. B. is a price taker. C. sets the price according to marginal revenue and marginal cost; the demand curve doesn't matter.
- A firm will increase its production when: a. Its marginal revenue rises, b. Its marginal cost rises, c. Its fixed costs fall, d. The demand for its product falls.
- The market supply curve for the product that this firm produces corresponds to the horizontal summation of all the individual firm's _____ cost curves above the [{Blank}] point of the ____ curve.
- The upward-sloping portion of a firm's marginal cost curve is the firm's a. total cost curve. b. marginal benefit curve. c. marginal revenue. d. total profit curve. e. supply curve.
- An aggregate supply curve that is either horizontal or upward sloping, depending on whether the absolute price level increases as firms produce more output is called: A. potential GDP. B. short minus long run aggregate supply curve. C. NAIRU. D. long
- The diminishing marginal product explains why, as a firm's output increases [{Blank}] a.) The production function and total-cost curve both get steeper. b.) The production function and total-cost curve both get flatter. c.) The production function gets
- For any monopolist with a positive marginal cost of production, its demand curve at its profit maximizing level: a. would be elastic, b. would be unit elastic, c. would be inelastic, d. could be either elastic or inelastic.
- The demand curve for the product X produced by Big Kahuna, a profit maximizing monopolist, can be described by the equation P=200 - Q. a. Graph the demand curve. b. Graph the marginal revenue curve.
- Assume a monopolist faces a market demand curve p = 100 - 2Q and MC = 20. a. What is the profit-maximizing level of output and price? b. Graph the marginal revenue, marginal cost, and demand curves,
- If the demand curve facing a monopolist shifts, then the monopolist's: a) marginal revenue curve and profit-maximizing level of output will change. b) marginal revenue curve will not change, but its profit-maximizing level of output will. c) total cost cu
- The supply curve for a pure monopolist _____. a. is the portion of the marginal cost curve that lies above the average variable cost curve. b. is perfectly price elastic at the market price. c. is upsloping. d. does not exist.
- The monopolist faces a demand curve given by D(p)=100-2p. Its cost function is c(y)=2y. What is its optimal level of output and price? If the demand curve facing the monopolist has a constant elastici
- The monopolist faces a demand curve given by D(p) = 100 - 2p. Its cost function is c(y) = 2y. a. What is its optimal level of output and price? b. If the demand curve facing the monopolist has a constant elasticity of 2, then what will be the monopolist's
- The supply curve for a monopolist is given by: a. The firm's marginal cost curve above the average variable cost curve, b. The one point on the demand curve that corresponds to the quantity for which price is equal to marginal cost, c. The one point on t
- For a perfectly competitive firm, the marginal revenue curve _____. A. is horizontal B. is vertical C. is same as demand curve D. lies above demand curve E. lies below demand curve
- For effective price discrimination to occur, a seller must: a. be a pure monopolist, b. have large economies of scale and control over a key natural resource, c. face a horizontal demand curve for its product, d. be able to prevent consumers from resellin
- With one variable input, marginal cost is increasing when: 1) marginal product is rising. 2) the firm experiences diminishing marginal returns to the variable input. 3) total cost is increasing at decreasing rate. 4) average cost above marginal cost. 5)
- A monopoly that is maximizing profits operates is the _____ portion of the demand curve. a Unitary elastic. b. Horizontal. c. Elastic. d. Inelastic.
- The long-run market supply is a perfectly competitive industry: a. Is always horizontal, b. Can slope upward if more firms in the market shift up the firms' cost curves, c. Can slope downward if more firms in the market shift up the firms' cost curves, d.
- In a linear demand curve, when will total revenues be maximized? A) Price elasticity of demand is equal to one in absolute terms. B) Marginal revenue equals marginal cost. C) Price elasticity of deman
- A monopolist faces a market demand curve given by P(y) = 100 - y. Its cost function is c(y) = y^2 + 20. a. Find its profit-maximizing output level y* and the market price p(y*). b. Calculate its total revenue, total cost, and profit at y*. c. Calculate th
- If the demand curve facing a monopolist is Price = 70 - 14Q, then the slope of its marginal revenue curve is: A. -28 B. -14 C. -7 D. -1
- At any point where a monopolist's marginal revenue is positive, downward-sloping straight-line demand curve is a. perfectly elastic. b. elastic, but not perfectly elastic. c. unitary elastic. d. inelastic.
- At any point where a monopolist's marginal revenue is positive, the downward-sloping straight-line demand curve is a. perfectly elastic. b. elastic, but not perfectly elastic. c. unitary elastic. d. inelastic.
Explore our homework questions and answers library
Browse
by subject