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For a monopolist, if MR=0 , it means he is operating A. Above the midpoint of his demand curve B. Below the midpoint of his demand curve C. At the midpoint of hid demand curve D. None of these?
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For a monopolist, if MR=0 , it means he is operating A. Above the midp...
Monopolist and MR=0
Monopoly is a market structure in which there is a single seller of a product having no close substitute. The monopolist has complete control over the price and output of the product.
MR or Marginal Revenue is the change in total revenue when one more unit of output is sold. It is the additional revenue earned by the seller by selling one additional unit of output.
If MR=0, it means that the marginal revenue earned by the seller on the last unit of output sold is zero. This is because the additional revenue earned by selling one more unit of output is exactly offset by the reduction in price required to sell that additional unit.
The position of the monopolist when MR=0 depends on the demand curve he faces.
The answer to the question is (C) At the midpoint of his demand curve. When MR=0, the monopolist is operating at the midpoint of his demand curve. This is because at the midpoint of the demand curve, the elasticity of demand is unitary, and the marginal revenue is zero.
When the monopolist produces and sells one more unit of output, the price of the product falls. The monopolist can only sell more units of output by reducing the price of the product. As a result, the marginal revenue earned by the monopolist on the last unit of output sold is less than the price of the product.
The demand curve facing the monopolist is downward sloping, which means that the monopolist can sell more units of output only by reducing the price of the product. The elasticity of demand varies along the demand curve.
At the top of the demand curve, where the price is high, the elasticity of demand is high, and the marginal revenue is negative. As the monopolist reduces the price of the product, he can sell more units of output, and the marginal revenue becomes less negative. At the midpoint of the demand curve, the elasticity of demand is unitary, and the marginal revenue is zero. Further down the demand curve, the elasticity of demand is low, and the marginal revenue is positive.
Thus, when MR=0, the monopolist is operating at the midpoint of his demand curve, where the elasticity of demand is unitary, and the marginal revenue is zero.
Monopoly
Monopoly is a market structure in which there is a single seller of a product having no close substitute. The monopolist has complete control over the price and output of the product.
MR
MR or Marginal Revenue is the change in total revenue when one more unit of output is sold. It is the additional revenue earned by the seller by selling one additional unit of output.
Impact of MR=0
If MR=0, it means that the marginal revenue earned by the seller on the last unit of output sold is zero. This is because the additional revenue earned by selling one more unit of output is exactly offset by the reduction in price required to sell that additional unit.
Position of Monopolist
The position of the monopolist when MR=0 depends on the demand curve he faces.
Answer
The answer to the question is (C) At the midpoint of his demand curve. When MR=0, the monopolist is operating at the midpoint of his demand curve. This is because at the midpoint of the demand curve, the elasticity of demand is unitary, and the marginal revenue is zero.
Explanation
When the monopolist produces and sells one more unit of output, the price of the product falls. The monopolist can only sell more units of output by reducing the price of the product. As a result, the marginal revenue earned by the monopolist on the last unit of output sold is less than the price of the product.
The demand curve facing the monopolist is downward sloping, which means that the monopolist can sell more units of output only by reducing the price of the product. The elasticity of demand varies along the demand curve.
At the top of the demand curve, where the price is high, the elasticity of demand is high, and the marginal revenue is negative. As the monopolist reduces the price of the product, he can sell more units of output, and the marginal revenue becomes less negative. At the midpoint of the demand curve, the elasticity of demand is unitary, and the marginal revenue is zero. Further down the demand curve, the elasticity of demand is low, and the marginal revenue is positive.
Thus, when MR=0, the monopolist is operating at the midpoint of his demand curve, where the elasticity of demand is unitary, and the marginal revenue is zero.
Community Answer
For a monopolist, if MR=0 , it means he is operating A. Above the midp...
C At the midpoint of demand curve
MR is zero when e=1
e is equal to one at the midpoint of the demand curve
MR is zero when e=1
e is equal to one at the midpoint of the demand curve
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For a monopolist, if MR=0 , it means he is operating A. Above the midpoint of his demand curve B. Below the midpoint of his demand curve C. At the midpoint of hid demand curve D. None of these?
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For a monopolist, if MR=0 , it means he is operating A. Above the midpoint of his demand curve B. Below the midpoint of his demand curve C. At the midpoint of hid demand curve D. None of these? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about For a monopolist, if MR=0 , it means he is operating A. Above the midpoint of his demand curve B. Below the midpoint of his demand curve C. At the midpoint of hid demand curve D. None of these? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for For a monopolist, if MR=0 , it means he is operating A. Above the midpoint of his demand curve B. Below the midpoint of his demand curve C. At the midpoint of hid demand curve D. None of these?.
For a monopolist, if MR=0 , it means he is operating A. Above the midpoint of his demand curve B. Below the midpoint of his demand curve C. At the midpoint of hid demand curve D. None of these? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about For a monopolist, if MR=0 , it means he is operating A. Above the midpoint of his demand curve B. Below the midpoint of his demand curve C. At the midpoint of hid demand curve D. None of these? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for For a monopolist, if MR=0 , it means he is operating A. Above the midpoint of his demand curve B. Below the midpoint of his demand curve C. At the midpoint of hid demand curve D. None of these?.
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