What is the relationship between marginal revenue and average revenue for a monopolist and is it the same for a perfect competitor?
What will be an ideal response?
Average revenue is equal to price for any firm but for a monopolist, marginal revenue is always less than price and therefore marginal revenue is less than average revenue. For a perfect competitor, marginal revenue is equal to price.
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Where should a producer stop devoting more of his spending on labor if initially the MRP of the additional dollar spent on labor is higher than the MRP of the additional unit spent on tools?
A. MRP/$ of additional labor falls below MRP/$ of additional tools. B. MRP/$ of additional capital increases above MRP/$ of additional tools. C. MRP/$ of additional labor becomes equal to MRP/$ of additional tools. D. MRP/$ of the additional labor falls to zero.
The most important of the factors that make a firm successful and that can be controlled by the firm's owners and managers are
A) lobbying government to erect or enforce entry barriers in its markets and the marketing of its products as widely as possible. B) the establishment of trademarks for its products and the aggressive defense of those trademarks. C) the differentiation of its products and the production of products at a lower average cost than competing firms. D) the selection of the prices of its products and the selection of the most productive and loyal employees.
An example of a randomized controlled experiment is when
A) households receive a tax rebate in one year but not the other. B) one U.S. state increases minimum wages and an adjacent state does not, and employment differences are observed. C) random variables are controlled for by holding constant other factors. D) some 5th graders in a specific elementary school are allowed to use computers at school while others are not, and their end-of-year performance is compared holding constant other factors.
A monopoly:
A. is constrained because its decisions cannot affect market price. B. is constrained by demand. C. faces a horizontal demand curve. D. is constantly threatened by the entry of new firms.