Exam 9: Monopoly Markets

Table 9.3 Julie plans to start a pet-sitting service.She surveyed her neighbourhood to determine the demand for this service.Assume that each person surveyed demands only one hour of pet sitting services per period.Table 9.3 above shows a portion of her survey results. -Refer to Table 9.3.Suppose Julie's marginal cost of providing this service is constant at $7 and she decides to charge each customer according to his or her willingness to pay.What is the value of consumer surplus by her customers?

In evaluating the degree of economic efficiency in a market, we can state that the size of the deadweight loss in a market will be smaller

Price discrimination is a rational strategy for a profit-maximising firm when

If a monopolist's price is $50 per unit and its marginal cost is $25, then

In regulating a natural monopoly, the price strategy that ensures the highest possible output and zero profit is one that sets price

With perfect price discrimination there is

If a monopolist's marginal revenue is $35 per unit and its marginal cost is $25, then

Figure 9.9 Figure 9.9 shows the demand and cost curves for a monopolist. -Refer to Figure 9.9.At the profit-maximising quantity, the difference between the monopoly's price and the marginal cost of production is

If a firm's average total cost is less than price where MR = MC,

If the market for a product begins as perfectly competitive and then becomes a monopoly, there will be a reduction in economic efficiency and a deadweight loss.

Why is it necessary for a firm that practices price discrimination be a price maker rather than a price taker? __________________________________________________________________________________________________________________________________________________________________________________________

Explain whether a monopoly that maximises profit will also be maximising revenue and production. __________________________________________________________________________________________________________________________________________________________________________________________

A patent or copyright is a barrier to entry based on

Figure 9.13 Figure 9.13 shows the market demand and cost curves facing a natural monopoly. -Refer to Figure 9.13.If the regulators of the natural monopoly allow the owners of the firm to break even on their investment, the firm will produce an output of ________ and charge a price of ________.

Table 9.3 Julie plans to start a pet-sitting service.She surveyed her neighbourhood to determine the demand for this service.Assume that each person surveyed demands only one hour of pet sitting services per period.Table 9.3 above shows a portion of her survey results. -Refer to Table 9.3.Suppose Julie's marginal cost of providing this service is constant at $7 and she charges $7.What is the value of the consumer surplus enjoyed by her customers?

Why, from an economic perspective, is price discrimination desirable?

Identify four reasons for high entry barriers.Briefly explain each reason. __________________________________________________________________________________________________________________________________________________________________________________________

For which of the following firms is patent protection of vital importance?

Joss is a marketing consultant.Iris and Daphne are potential customers interested in commissioning Joss to undertake a market survey and compile the findings in a report.Iris is willing to pay $500 for the service while Daphne is willing to pay $800.Suppose that the opportunity cost of Joss's time is $1200.Assume that Iris and Daphne do not know each other.If Joss charges the same price per copy to both Iris and Daphne,

If a restaurant was a natural monopoly, its