ECON MICRO
5th Edition
ISBN: 9781337000536
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 9, Problem 6.10P
To determine
The reason for an identical marginal revenue curve for a perfectly discriminating monopolist is to that of the demand curve it faces.
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5. Conditions for price discrimination
Price discrimination is the practice of charging different prices for the same product that are not justified by cost differences.
Evaluate the following statement: "Price discrimination requires market segmentation."
False, because the monopolist can never charge anyone their maximum willingness to pay anyway
False, because the monopolist does not need to know people's willingness to pay for its goods
None of these choices
True, because the monopolist needs to know the willingness to pay of different groups of consumers
Sg3
Economics
An industry produces its product, Scruffs, at a constant marginal cost of $50. The market demand for Scruffs is equal to
Q=75,000−500PQ
What is the value to a monopolist who is able to develop a patented process for producing Scruffs at a cost of only $45? $_____________
If the industry producing Scruffs is purely competitive, what is the maximum benefit that an inventor of a process that will reduce the cost of producing Scruffs by $5 per unit can expect to receive by licensing her invention to the firms in the industry? $________________
27.
Price discrimination creates economic inefficiency.
False
True
True, if the firm is a monopolist, otherwise false.
True, if the firm is perfect competitor, otherwise false.
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- Q28 If a single-price monopoly is presently producing an output at which marginal cost is less than marginal revenue, it can increase its profits by... a. Reducing output and keeping prices unchanged. b. Expanding output and raising price. c. Expanding output and lowering price. d. Reducing output and raising prices. e. Reducing barriers to entry.arrow_forward1.Microsoft is one of the leading software companies. Prior to 2000, Microsoft’s share of the market for personal computer operating systems stood above 80 per cent. However, since the twenty-first century Microsoft’s market share has steadily declined to 40 per cent. This is due to the rise in competing software producers such as Apple macOS (10%), Google's Android OS (35%), Linux Operating System (35%), and Apple iOS (5%). The market share of each company is provided in parentheses. Google and Linux have decided that it would be in their best interest to work together to serve the market. This is not common knowledge to the person’s outside of the companies. i. Draw how equilibrium price and quantity are determined in this industry. Hi does this refer to the monopoly market structure diagrams? 2. Allsmart’s demand curve is given by Q=10-P for its dishwashers. The marginal and average cost is $3 per dishwasher produced. Complete the following table. Photo below concerns…arrow_forward17- Intellectual property law is a body of law that includes Group of answer choices the right of inventors to produce their inventions the right of inventors to sell their inventions trademark, patent and trade secret legislation copyright legislation, as well as all of the abovearrow_forward
- 16 The marginal revenue for a price searcher is: more than total revenue. less than the level of output. less than marginal cost. less than the price.arrow_forwardH11. Assume a firm in a competitive market is outputting 500 units and sells each unit for 4 dollars. The average total cost is 3 dollars. What is the total profit? Suppose when a monopoly charges 5 dollars, it sells 2 units of output. When it charges 4 dollars it sells 3 units of output. What is the Marginal Revenue of the 4th output?arrow_forward16-5. Your pharmaceutical firm is seeking to open up new international markets by partnering with various distributors. The different distribution within a country are stronger with different market segments (hospitals, retail pharmacies, etc.) but also have substantial overlap. A. In Egypt, you calculate that the annual value created by one distributor is $60 millions per year, but would be $80 millions if two distributors carried your product line. How much of the value can you expect to capture? B. Argentina also has two distributors with values similar to those in Egypt, but both are run by the government. How does this affect the amount you could capture? C. In Argentina a, if you do not reach an agreement with the government distributors, you can set up a less efficient Internet-based distribution system that would generate $20 million in value to you. How does tis affect the amount you could capture?arrow_forward
- Q48' Assume that Cresco Labs is a monopolist that can sell 15 ounces of marijuana per day at $12.50 for each ounce. To sell 16 ounces of marijuana per day, the price must be cut to $12.20. The marginal revenue of the 16th ounce is Multiple Choice $12. $7.70 . $16. $-0.30. $12.20.arrow_forward1-Can a monopsony exercise monopsony power if the supply curve it faces is horizontal? Why or why not? Explain. 2_With the perfect price discrimination, the marginal revenue curve coincides with the demand curve. Why?Explain.arrow_forwardQuestion 23 The deadweight loss that arises from a monopoly is a consequence of the fact that the monopoly Group of answer choices quantity is lower than the socially-optimal quantity. price equals marginal revenue. price is the same as average revenue. earns positive profits.arrow_forward
- Main Question: Why will a monopolist refuse to produce at output level when MC = P? Sub Question 2: What is the opportunity cost on the monopolist if it produces at output level when MR > MC? Sub Question 3: What then is the condition for optimal production for a monopolist?arrow_forward1. When a monopoly advertises, the goal is to _____ because _____. Group of answer choices increase its demand as a share of market demand; the monopoly faces a significant portion of market demand increase market demand; the monopoly faces the entire market demand increase market demand; the monopoly produces a product that is identical to the output of all other sellers in the market increase its demand as a share of market demand; the monopoly faces a small portion of market demand 2. If given a choice, a person would prefer to experience the situation of which of the following families? Group of answer choices a family with income equal to the world poverty line a family with income equal to the United States poverty line a family with income double the world poverty line a family with income equal to the poverty line in the United States in 1970 3. A business using its bargaining power as a major buyer of labor to pay lower prices, including lower wages,…arrow_forward16. Relative to a competitively organized industry, a monopoly is more likely to produce Select one: a. Less output, charges higher price, and earns economic profits. b. Less output, charges lower prices, and earns only a normal profit. c. More output, charges higher prices, and earns economic profits. d. Less output, charges lower prices, and earns economic profits.arrow_forward
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