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Homework answers / question archive / 1)For a monopolist, marginal revenue equals a
1)For a monopolist, marginal revenue equals
a. Price times quantity.
b. Price.
c. The change in total revenue divided by the change in quantity.
d. The change in quantity divided by the change in total revenue.
2. Google holds market power by all of the following strategies except
a. Purchasing rivals.
b. Low pricing.
c. Elimination of search results for competitors.
d. Exclusive dealings with advertisers.
1. For a monopolist, marginal revenue equals (c) The change in total revenue divided by the change in quantity.
Marginal revenue is equal to the additional revenue that is produced by selling an additional unit of the good. This formula is the same for all market types.
2. Google holds market power by all of the following strategies except (c) Elimination of search results for competitors.
Option (c) is the correct answer because this is illegal.
Option (a) is not the correct answer because purchasing rivals allows them to keep their market power by eliminating competition.
Option (b) is not the correct answer because by keeping prices low, they are preventing new firms from being able to realize economies of scale because new firms would need to produce at an unreasonably-high output level in order to achieve the economies of scale necessary to be profitable.
Option (d) is also incorrect because exclusive dealings with advertisers also allow them to hold onto market power by prevent competitors from becoming well-known enough to capture much of the existing market that Google currently holds.