Question

QUESTION 8 Jen is the only seller of bottled water at the Brisbane Entertainment Centre, There are no close substitutes available. Patrons are not allowed to bring any form of bottled water to the venue, Select the item from the list provided to make the following statements true: The extent of the deadweight 1. Supply loss created by Jen's monopoly depends on her ability to set 3. Economic profits price. This is also referred to as 4. Marginal revenue 2. Government regulators 5. Demand 6. Minimised 7. Deadweight loss 8. Maximised 9. Differentiated 10. Opportunity costs 11. Market power 12. Marginal cost As a monopolist, Jen will be able to set the price of bottled water so that her profit is If monopolistic competition existed for drinks at this Entertainment Centre, the available products would be

Answer 1

1. The monopoly firm can set any price they want this is because they are the only production unit in the market. This is the market power power of the monopoly. The monopolist will set a price above the marginal cost so there should be a dead weight loss associated with it.

Ans: 11). Market power.

2. The monopoly firm will maximise the profits where the marginal revenue equals the marginal cost of production.

Ans: 8). Maximized.

3. In a monopolistic competition compared to monopoly the products would be differentiated.

Ans: 9). Differentiated.