Question

rank the scenarios in terms of how much profit a monopolist will earn from each. Assume that the scenarios are similar in all ways except for the manner in which the firm prices its good.

Rank the scenarios in terms of how much profit a monopolist will earn from each. Assume that the scenarios ways except for the manner in which the firm prices its good. are similar in all Most profit The firm must charge a price that is equivalent to its marginal cost. The firm can charge different prices to different consumers. The firm must charge all consumers the same price. The firm has the ability to perfectly price discriminate. Least profit Answer Bank

which of the following are characteristics of a monopoly market structure ?

Answer 1

Rank the scenarios from most profit to least profit as follows: The firm has the ability to perfectly price discriminate - If there is a complete dominance of the firm in the market then, there will be a discrimination for each and every consumer by offering a take it or leave it price. The firm can charge different prices to different consumer - When there is an ability to the firm to discriminate then it charges different prices to different consumers. The firm must charge all consumers the same price - Firms should charge same price to all the consumers, there should be no discrimination of price in the market. The firm must charge a price that is equivalent to its marginal cost - This is the minimum price the firm can charge when profits are 0. Characteristics of a monopoly market structure • . No close substitutes are available There is only one firm in the industry There are only these two characteristics because a monopoly market is one where there is a single seller who has the sole authority to sell its product as there are no close substitutes of the product in the market. Such markets enjoy the profit solely, have high barriers for other firms to enter, sets its own price and has full control over its supply. Thus, the correct answers are options A and Cl.