AutoSave O Off) Review of Monopolies1 ? No Label . Saved to this PC v Search A Phillips, Tanner J(651) X File Home Insert Draw Design Layout References Mailings Review View Help Comments Editing Share Review of Monopolies To earn credit for this assignment, a student must answer 3 out of the 4 problem sets correctly Problem Set A Choose the correct definition for each key term below. Key Terms Monopoly Natural Monopoly Price Discrimination Arbitrage Perfect Price Discrimination Definitions 1. A monopoly that arises because a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms. 2. A firm that is the sole seller of a product without close substitutes 3. A situation in which the monopolist can charge each customer precisely his willingness to pay. 4. The business practice of selling the same good at different prices to different customers 5. The process of buying a good in one market at a low price and selling it in another market at a higher price. 6. A monopoly can continue to generate economic profits in the long run because a. potential competitors sometimes don't notice the profits. Page 1 of 4 601 words [ Text Predictions: On Accessibility: Good to go [ Focus + 100% 3:02 PM Type here to search m O 84'F Mostly cloudy ~ 4/16/2024AutoSave O Off) Search A Phillips, Tanner J(651) X Review of Monopolies1 ? No Label . Saved to this PC v File Home Insert Draw Design Layout References Mailings Review View Help Comments Editing Share 7. If marginal revenue exceeds marginal cost, a monopolist should a. increase output b. decrease output c. keep output the same because profits are maximized when marginal revenue exceeds marginal cost d. raises the price. Problem Set B 8. What are the three sources of the barriers to entry that allow a monopoly to remain the sole seller of a product? 9. What is the entry barrier that is the source of the monopoly power for the following products or producers? List some competitors that keep these products or producers from having absolute monopoly power. a. United States Postal Service b. Prozac (a brand-name drug) c. DeBeers Diamonds + Page 2 of 4 601 words [ Text Predictions: On Accessibility: Good to go Focus 100% 3:03 PM Type here to search W 84'F Mostly cloudy ~ 4/16/2024LAY Review of Monapolies1 @ Mo Label = Saved to this PC ~ lanner J(651) ':. File Home Insert Draw Design Layout References Mailings Review View Help | = comments | fEditing ~ | | & share ~| - Problem Set C 10. Suppose a firm has a patent on a special process to make a unique smoked rack of ribs. The following table provides information about the demand facing this firm for this unique product. Pounds of Ribs Price Total Revenue Marginal Revenue 0 $20 18 16 14 12 10 ~ o ||| W a. Complete the table below b. Suppose there are no fixed costs and that the marginal cost of production of smoked ribs is constant at $6 per pound. (Thus, the average total cost is also constant at $6 per pound.) What is the quantity and price chosen by the monopolists? What is the profit earned by the monopolist? . What is the price and quantity that maximizes total surplus? d. Compare the monopoly solution and the efficient solution. Is the monopolist's price too high or too low? Is the monopolist's quantity too high or too low? Why? e. Is there a deadweight loss in this market if the monopolist charges the monopoly price? - Page 3of4 601 words [U Text Predictions: On T_?/ACCES!\\EHIW: Goodto go :D: Focus = | -&+ 100% = - = 303 PM B O Typehereto search &5 i B =n d g @ i 1 84F Mostlycloudy A 98 & o0, AutoSave O Off) Review of Monopolies1 ? No Label . Saved to this PC v Search A Phillips, Tanner J(651) X File Home Insert Draw Design Layout References Mailings Review View Help Comments Editing Share 10. Suppose a firm has a patent on a special process to make a unique smoked rack of ribs. The following table provides information about the demand facing this firm for this unique product. Pounds of Ribs Price Total Revenue Marginal Revenue 0 $20 1 18 2 16 3 14 4 12 5 10 6 8 6 a. Complete the table below b. Suppose there are no fixed costs and that the marginal cost of production of smoked ribs is constant at $6 per pound. (Thus, the average total cost is also constant at $6 per pound.) What is the quantity and price chosen by the monopolists? What is the profit earned by the monopolist? C. What is the price and quantity that maximizes total surplus? d. Compare the monopoly solution and the efficient solution. Is the monopolist's price too high or too low? Is the monopolist's quantity too high or too low? Why? e. Is there a deadweight loss in this market if the monopolist charges the monopoly price? Explain. Page 3 of 4 601 words [ Text Predictions: On Accessibility: Good to go [ Focus + 100% 3:03 PM Type here to search Eli W 84"F Mostly cloudy ~ 4/16/2024L1 Review of Monapolies1 @ No Lal aved to this P A Phillips, Tanner J{651) File Horme Insert Draw Design Layout References Mailings Review View Help | 7 comments | fEditing x | 1% Share ~ | - Problem Set D 11. You are a watching television news show. A consumer advocate is discussing the airline industry. He says, \"There are so many rates offered by airlines that it is technically possible for a 747 to be carrying a full load of passengers where no two of them paid the same price for their tickets. This is clearly unfair and inefficient.\" He continues, \"We need legislation that requires airlines to charge all passengers on an airplane the same price for their travel.\" A, List some of the ways airlines divide their customers according to their willingness to pay. B. Is it necessarily inefficient for airlines to charge different prices to different customers? Why or why not? Page3of4 601words [} TextPredictions: On T Accessibility: Good to go D Focus = B - i il O - P = 3:03 PM i g % 847 Type here to search = i c n : @ i 84F Mostly cloudy A~ 8 & yeony B