Answered: A price-discriminating monopoly O is…

A price-discriminating monopoly O is illegal cannot offer discounts sells a larger quantity than it would if it were a single-price monopoly

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter9: Monopoly

Section: Chapter Questions

Problem 3SCQ: Suppose the local electrical utility, a legal monopoly based on economies of scale, was split into...

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A price-discriminating monopoly
O is illegal
cannot offer discounts
sells a larger quantity than it would if it were a single-price monopoly

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Draw the demand curve, marginal revenue, and marginal cost curves from Figure 9.6, and identify the quantity of output the monopoly wishes to supply and the price it will charge. Suppose demand for the monopolys product increases dramatically. Draw the new demand me. What happens to the marginal revenue as a result of the increase in demand? What happens to the marginal cost curve? Identify the new profit-maximizing quantity and price. Does the answer make sense to you? Figure 9.6 Illustrating Profits at the HealthPill Monolpoly
Imagine a monopolist could charge a different price to every customer based on how much he or she were willing to pay. How would this affect monopoly profits?
Suppose the local electrical utility, a legal monopoly based on economies of scale, was split into four films of equal size, with the idea that eliminating the monopoly would promote competitive pricing of electricity. What do you anticipate would happen to prices?
Suppose demand for a monopolys product falls 50 that its profit-maximizing price is below average variable cost. How much output should the film supply? Hint: Draw the graph.
How can a monopolist identify the profit-maximizing level of output if it knows its total revenue and total cost curves?
Can you think of any examples of successful predatory pricing in the real world?
One way a monopoly can convert additional consumer surplus into economic profit is to O price discriminate raise prices O lower prices
Table 15-18Tommy’s Tie Company, a monopolist, has the following cost and revenue information. Assume that Tommy’s is able to engage in perfect price discrimination. COSTS REVENUES QuantityProduced Total Cost MarginalCost QuantityDemanded Price TotalRevenue MarginalRevenue 0 $100 -- 0 $170 -- 1 $140 1 $160 2 $184 2 $150 3 $230 3 $140 4 $280 4 $130 5 $335 5 $120 6 $395 6 $110 7 $475 7 $100 8 $575 8 $95 Refer to Table 15-18. If the monopolist can engage in perfect price discrimination, what is the quantity that maximizes economic profit? Group of answer choices 5 ties 6 ties 7 ties 8 ties
What is a defining characteristic of a natural monopoly? O horizontal total cost curve economies of scale over a very large range of output O strong patents that prevent any competition O marginal costs above the average cost
Why does a monopoly arise? O because of diseconomies of scale because entry to an industry is blocked because of elastic demand because firms want to maximize profits
What is the effect of a monopoly? reduced competition O increased competition O reduced advertising
Question 19 Which of these is NOT a characteristic of monopoly? O potential for long-run economic profit O no barriers to entry O substantial control over price O a single seller