Exam 12: Monopoly

The following figure shows the costs and revenue curves of a firm in a monopoly market. -Refer to the figure above.If this monopolist engages in the "first degree price discrimination," he will charge ________ per unit of its output.

The price chosen by a monopolist ________.

The following figure shows the costs and revenue curves of a firm in a monopoly market. -Refer to the figure above.If the government decides to regulate this market at the socially optimal price level,it mandates the monopolist to sell its product at the price of ________.

Firms that provide services (e.g.,haircuts,landscaping,medical care,and dental care)are better able to engage in price discrimination.Why might this be the case?

Scenario: When a monopolist charges $10 for its product, it sells 500 units of the product. When it lowers the price to $6, it sells 1,400 units of the product. -Refer to the scenario above.Which of the following statements is true of the demand curve that the monopolist faces in the price range $6 to $10?

Scenario: Mr. Olivander has a monopoly on supplying magic wands. The table below shows the demand schedule for magic wands per day. -Refer to the scenario above.Mr.Olivander used to sell five wands per day.Now he plans to increase his sale to nine wands.The price effect of this plan is a ________,and the quantity effect of this plan is a ________ in his revenue.

Which of the following statements is true?

The following figure shows the marginal revenue (MR) and demand curves faced by a monopolist. -Refer to the figure above.If the monopolist faces a constant marginal cost of $6,at what price should it sell its output to maximize profits?

Greenaqua Corp.was given the exclusive right to produce and sell its newly introduced water purifier for 20 years.The right granted to Greenaqua is an example of a ________.

How is the demand curve faced by a perfectly competitive firm different from that faced by a monopoly? How does it affect its pricing policies?

If the government imposes marginal cost pricing on a firm with a natural monopoly,the firm will ________.

If a monopolist faces a linear demand curve,its marginal revenue curve will be ________.

Scenario: Tobac Co. is a monopolist in the cigarette market in Nicotiana Republic, where the U.S. dollar is used as the official currency. The firm faces the demand curve shown below. The firm has a constant marginal cost of $2.00 per pack. The fixed cost of the firm is $50 million. To answer the questions below, it is useful to know that the equation of the (inverse) demand curve is P = 8 - 0.04Q, where Q is the quantity demanded (in millions of packs) and P is the price per pack (in $). Also, you should draw in the marginal revenue curve. -Refer to the scenario above.If the quantity sold is 50 million packs,then the firm's total revenue is ________ and the total cost is ________.

A firm's objective behind charging different prices to different consumers for the same good is to enhance ________.

Scenario: When a monopolist charges $5 for its product, it sells 250 units of the product. When it decreases the price of the product to $4, it sells 325 units of the product. -Refer to the scenario above.What is the price effect of the price change?

The following figure shows the market demand curve for penicillin, an antibiotic medicine. Initially, the market was supplied by perfectly competitive firms. Later, the government granted the exclusive right to produce and sell penicillin to one firm. The figure also shows the marginal revenue curve (MR) of the firm once it begins to operate as a monopoly. The marginal cost is constant at $3, irrespective of the market structure. -Refer to the figure above.What is the price that a perfectly competitive firm would charge?

When a firm obtains market power through barriers to entry created not by the firm,but by the government,it is referred to as ________.

________ refers to the ability of sellers to affect market prices.

The following figure shows the market demand curve for penicillin, an antibiotic medicine. Initially, the market was supplied by perfectly competitive firms. Later, the government granted the exclusive right to produce and sell penicillin to one firm. The figure also shows the marginal revenue curve (MR) of the firm once it begins to operate as a monopoly. The marginal cost is constant at $3, irrespective of the market structure. -Refer to the figure above.What is the quantity supplied in the market when the market is supplied by one firm?

Differentiate between a patent and a copyright.