For a Monopolist, the Point Where the Marginal Revenue Curve

question 195

Multiple Choice

For a monopolist, the point where the marginal revenue curve intersects the horizontal axis is:

• A) one-fourth of the distance between the origin and the point where the demand curve intersects the horizontal axis.
• B) located at the same point where the demand curve intersects the horizontal axis, since for a monopolist, the demand curve and the marginal revenue curve overlap.
• C) one-half the distance between the origin and the point where the demand curve intersects the horizontal axis.
• D) unable to be determined without knowing the location of the marginal cost curve.

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Definitions:

Contribution Margin

The amount remaining from sales revenue after variable costs have been deducted, indicating the contribution of sales to covering fixed expenses.

Machine Hours

A measure of the amount of time a machine is operated, used as a basis for allocating manufacturing overhead to products.

Theory of Constraints

A management paradigm that focuses on identifying and addressing the most significant limiting factor (constraint) that hinders achieving a goal, and systematically improving that constraint until it is no longer the limiting factor.

Contribution Margin

Contribution margin is the amount by which a product's sales price exceeds its total variable costs, indicating how much contributes to covering fixed costs and generating profit.