Question

29. The following figure shows the demand curve faced by a monopolist.




Refer to the figure above. What is the change in total revenue due to a price decrease from $4 to $3?

Price 0 100 200 300 400 500 600 700 800 900 Quantity (units)

a. Total revenue decreases by $200.

b. Total revenue increases by $100.

c. Total revenue decreases by $100.

d. Total revenue dinreases by $200.

30. Which of the following is true of an increase in product prices?

a. When the quantity effect dominates the price effect, total revenue decreases.

b. The quantity effect always dominates the price effect.

c. The price effect always dominates the quantity effect.

d. When the quantity effect dominates the price effect, total revenue increases.

31. If a firm can sell 10 units of output for $15 each or 11 units at $14 each, the additional revenue from selling the eleventh unit is ________.

a. $14

b. $4

c. $154

d. $150

32. The following figure shows price versus quantity for a market.




Refer to the figure above. On what interval of quantity does total revenue increase when quantity increases?

a. Total revenue is always increasing when quantity increases

b. From 0 to Q3

c. From 0 to Q2

d. From 0 to Q1

Answer 1

The change in total revenue due to a price decrease from $4 to $3 will be (4*500-3*600) = $200. The total revenue increases by $200.

The statement which is is true of an increase in product prices is that when the price effect dominates the quantity effect, total revenue decreases.

If a firm can sell 10 units of output for $15 each or 11 units at $14 each, the additional revenue from selling the eleventh unit is (14*11-15*10) = $4

interval of quantity does total revenue increase when quantity increases is till the point when the MR is positive. When the MR is positive the total revenue is increasing. When the TR is constant, MR=zero and when TR decreases or falls MR becomes negative. So the correct option is From 0 to Q2