Consider the Following AR and MR Curves for a Single-

question 113

Multiple Choice

Consider the following AR and MR curves for a single- price monopolist.
FIGURE 10- 2
-If a single- price monopolist sets price where the price elasticity of demand exactly equals 1,its

• A)marginal revenue is always positive.
• B)total revenue is rising,although marginal revenue is falling.
• C)total revenue is at its maximum.
• D)total profits are at a maximum.
• E)total revenue is falling.

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Definitions:

Consumer Price Index

A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.

Market Basket

A selected set of goods and services used to track changes in prices and measure inflation over time; represents the typical consumption of a household.

Nominal GDP

The aggregate price of every ultimate good and service generated within a nation over a certain period, valued in the current monetary rates without modifications for inflationary changes.

Hyperinflation

A very high rate of inflation.