Exam 9: Monopoly Markets

Figure 9.3 Figure 9.3 above shows the demand and cost curves facing a monopolist. -Refer to Figure 9.3.Suppose the monopolist represented in the diagram above produces positive output.The price charged at the profit-maximising/loss-minimising output level is

'Being the only seller in the market, the monopolist can choose any price and quantity it desires.' Evaluate this statement: Is it true or false? Explain your answer. __________________________________________________________________________________________________________________________________________________________________________________________

Microsoft hires marketing and sales specialists to decide what prices it should set for its products, whereas a wealthy corn farmer in Iowa, who sells his output in the world commodity market, does not.Why is this so?

Although some economists believe network externalities are important barriers to entry, other economists disagree because

In reality, because few markets are perfectly competitive, some loss of economic efficiency occurs in the market for nearly every good or service.

If you own the only bookstore in a small town, do you have a monopoly?

Suppose that a perfectly competitive industry becomes a monopoly.What effect will this have on consumer surplus, producer surplus, and deadweight loss?

What does the government grant a firm when it makes the firm the exclusive legal provider of a good or service?

How do the price and quantity of a monopoly compare to that of a perfectly competitive industry?

Because each customer pays according to her willingness to pay, a consumer maximises her consumer surplus under first-degree price discrimination.

The market demand curve facing a monopolist is more elastic than the market demand curve facing a monopolistic competitor.

Online companies gather personal information about the customers who shop on their websites, and some of those companies will use the data to estimate price elasticities of the customers.Doing this is a way that these companies might be able to charge a higher price for a product to those customers who have a ________ price elasticity of demand.

If price discrimination occurs in a market,

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.If Julie charges $10 per hour, how many hours of pet sitting services will be purchased and by whom?

Figure 9.6 Figure 9.6 shows the cost and demand curves for a monopolist. -Refer to Figure 9.6.What amount of profit does the monopolist earn?

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 the price is $500 per copy,

A market economy benefits from market power

What three conditions must hold for a firm to successfully price discriminate? __________________________________________________________________________________________________________________________________________________________________________________________

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 Julie's total revenue and how many hours of service will be purchased?

Figure 9.4 Figure 9.4 shows the demand and cost curves for a monopolist. -Refer to Figure 9.4.The price charged for the profit-maximising output level is