For a Monopoly with a Straight-Line Demand Curve, When Demand

question 107

Multiple Choice

For a monopoly with a straight-line demand curve, when demand is

• A)unit-elastic, marginal revenue reaches its maximum.
• B)inelastic, marginal revenue is negative.
• C)elastic, marginal revenue is positive and increasing.
• D)elastic, marginal revenue is greater than demand.
• E)perfectly inelastic, marginal revenue equals demand.

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Definitions:

Long-Run Scale

Refers to the time period in which all factors of production and costs are variable, allowing companies to adjust all inputs in response to market conditions.

Short-Run

A period in which at least one input is fixed, limiting the firm's capacity to adjust to changes in demand or market conditions.

Positive Profits

Financial gains that are greater than zero, indicating a company's revenues exceed its costs and expenses.

Variable Costs

Costs that change in proportion to the activity or volume of business, such as materials and labor.