Exam 10: Monopoly and Price Discrimination

Suppose that the price elasticities of demand for pharmaceutical products differ across several customer groups.If senior citizens have the most elastic demand for pharmaceutical products,they will receive:

How does rent-seeking behavior result in additional deadweight loss?

For a competitive firm,marginal revenue is ________ price,whereas for a monopolist marginal revenue is ________ price.

For a profit maximizing monopolist,price:

How does the demand curve facing a monopoly firm compare with the demand curve facing a perfectly competitive firm?

-Refer to Figure 10.9.The deadweight loss of monopoly is:

Recall the application of a casino monopoly in Creswell,Oregon,the developers interested in building the casino offered $2 million per year to the citizens.This is another example of:

For a monopolist,price is equal to marginal revenue.

Which type of barrier to entry allows the electric company to maintain a monopoly over the production of electricity?

If a restaurant charges seniors one price and nonseniors another price,the restaurant will apply the marginal principle:

For a competitive firm,the level of output that maximizes profits is where marginal revenue ________ marginal cost,and for a monopolist it is where marginal revenue ________ marginal cost.

One barrier to entry is a patent granted by consumer associations.

Additional Application Monopolies are not always easily ended.The European Commission's directorate for the internal market is attempting to end Germany's chimney sweeps' monopoly.For many decades the chimney sweeps in Germany have held a "near-perfect monopoly." While the profession is a private enterprise the local governments set the prices,control the number of sweeps in each district,require that households are inspected,and will not allow consumers to choose a different sweep even if they do not like the one they have.Due to the required annual inspections,sweeps always have jobs and any new entrants into the market will wait years before they are given a district to operate in.One argument in favor of this monopolistic arrangement is based on public safety.If new sweeps are not allowed to enter the industry then quality regulation is more easily insured.If the current sweeps continue to earn profits,none will leave the industry either.While the European Commission wants a more competitive market,they realize that it will not develop soon. "Chimney Sweeps Under Fire," The Economist,October 21,2006,p.76. -How is the chimney sweep monopoly maintained?

To maximize profit,the monopolist produces on the ________ portion of the demand curve where ________.

Relative to a perfectly competitive market,a monopoly produces:

A monopoly is a market that consists of one buyer and many sellers.

A local cable company has a monopoly on cable service.If it sells 20 of the services its total revenue is $10000,and if it sells 21 services its total revenue is $10,600.When the local cable company sells 21 programs,the price per service is closest to:

Assume a non-price discriminating monopolist can sell 45 units of a good for $ 1.50 each and can sell 46 units of that good for $ 1.45 each.The marginal revenue of the 46th unit is:

The price elasticity of demand for restaurant meals is 1.5 for type A consumers and 0.9 for type B consumers.If a restaurant decides to price discriminate,which group will be charged a higher price? Explain.

-Refer to Figure 10.6.At the profit-maximizing level of output,the firm has a: