What do you understand by discriminatory monopoly

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Reference no: EM133202909

Assignment:

1. Explain the effects of low price-guarantee on the price.

2. What do you understand by discriminatory monopoly? Bring out the conditions that enables the monopoly firm to charge different prices for its product in different markets.

3. The figure below shows the demand and cost curves for a monopolist. Assume there are no fixed costs in the market and an unlimited number of units of the product can be produced at a marginal cost of $10 per unit. As a result average total cost and marginal cost are the same.

537_Demand and cost curves for a monopolist.jpg

1. Find the output level and the price charged to consumers, when the monopolist is maximizing its profit.

2. Find the monopoly's total economic profit when it is maximizing its profit.

3. What would be the market price and the market quantity, if the industry in the figure is perfectly competitive (Assuming a constant cost industry)?

Activity 1:

Since a perfectly competitive firm can sell as much as it wishes at the market price, why can the firm not simply increase its profits by selling an extremely high quantity?(200 word)

Activity 2:

Discuss how a profit- maximizing monopoly chooses output and price.(200 word)

Activity 3:

Name two public goods and explain why they are public goods. What is the free rider problem?(200 word)

Reference no: EM133202909

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