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A monopolist

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Please make comments about these two statements.

1. A monopolist can charge whatever they want to, afterall, they are the sole supplier!

2. Monopolists should not advertise since they have no competitors and cannot benefit therefrom.

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1. A monopolist cannot charge whatever they want because while they are the sole supplier of a product, for many products there are alternatives, including, doing without the good or service. For example, say 95% of the population makes $40,000 or less per year, a landline monopoly (where there aren't even cell phones or internet) cannot charge over $40,000 a year for a phone line because people will simply do without ...

Solution Summary

This solution provides an assessment of two statement made about monopolies.

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See Also This Related BrainMass Solution

monopolist output, charges, and profit-maximization

In the following table are demand and cost data for a pure monopolist. Complete the table by filling
in the columns for total revenue, marginal revenue, and marginal cost. Answer these three questions:

(a) What output will the monopolist produce?
(b) What price will the monopolist charge?
(c) What total profit will the monopolist receive at the profit-maximizing level of output?

Total Marginal Total Marginal
Quantity Price revenue revenue cost cost
0 $34 $______ $ 20
1 32 ______ $______ 36 $______
2 30 ______ ______ 46 ______
3 28 ______ ______ 50 ______
4 26 ______ ______ 54 ______
5 24 ______ ______ 56 ______
6 22 ______ ______ 64 ______
7 20 ______ ______ 80 ______
8 18 ______ ______ 100 ______
9 16 ______ ______ 128 ______
10 14 ______ ______ 160 ______

Price discrimination is often used by businesses. Explain the conditions under which price discrimination is practiced and the economic consequences of price discrimination.

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