Question

1,6. A firm finds that by producing and selling the last unit of its commodity, the marginal revenue it earns is R15 and the marginal cost it incurs is R14. In order to maximise profits, the firm should A reduce its output irrespective of the type of firm it is. B. increase its output irrespective of the type of firm it is. C. reduce its output if it is a perfectly competitive firm, but not necessarily if it is a monopoly firm. D. reduce its output if it is a monopoly firm, but not necessarily if it is a perfectly competitive firm. Which of the following statements about a monopoly is true? 1.7 A. Price in the long run is usually equal to maximum total cost. B. In the long run, a monopolist can earn only normal profits. C. For a monopoly, profit will be maximised where P MR. D. Price in the long run is not usually equal to minimum average total cost. Which of the following is not a characteristic of oligopoly? 1.8. A. A firm in an oligopolistic market makes pricing decisions independently of the pricing decisions of another firm in the market. B There are sellers and many buyers in the industry. C. It has a downward-sloping demand curve. D. To reduce uncertainty in the market, oligopolistic firms may collude. Which of the following best illustrates the law of demand? 1.9 A. Noah wanted to buy a T-shirt and he bought two when he saw that it was on sale. B. Byron really wanted to attend a concert and even when the price of a ticket was increased, he still bought one. C. Shelly sells shoes and when she increased the prices of shoes, she sold more D. On black Friday when the price of all 2-litre bottles of Coke at Checkers were marked down, the average daily number of 2-litre bottles of Coke sold remained unchanged 1.10. Price discrimination A. is based on cost differences between firms. B. means selling at a lower price than what consumers are willing and able to pay. C. occurs when a firm charges different consumers different prices. D. requires that consumers and markets are independent.

Answer 1

Answer-1.6 The correct option is B.) Increase it's output irrespective of the type of the firm it is.

This is because at profit-maximising level MR must be equal to MC.

Answer-1.7 The correct option is D.) Price in the long run is not usually equal to minimum average total cost.

Monopolies can maintain super-normal profits in the long run. Thus, P is greater than minimum of ATC.

Answer-1.8 The correct option is A.) A firm in an oligopolistic market makes pricing decisions independently of the pricing decisions of another firm in the market.

It is because the distinctive feature an oligopoly is interdependence

Answer-1.9 The correct option is A.) Noah wanted to buy a T-shirt and he bought two when he saw that it was on sale

It is because law of demand says that there exists inverse relationship between price and quantity demanded. Due to sale price is low as a result Noah is purchasing more.

Answer-1.10 The correct option is C.) Occur when a firm charges different consumers different prices.