Econ Qbank Ch19

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NSS Exploring Economics 4

Chapter 19Monopoly pricing

Questions

P.2
Think it over
1.
Why does Microsoft not lower its price for Windows so that more people can use its software products?

2.
The MTR charges students a lower fare. Do you know why?

P.3
Discuss
19.1
Which private companies can be regarded as monopolists in Hong Kong? Do they charge higher prices? What do you mean by ‘higher prices’? Higher than what levels?

P.7
Test yourself
19.1
Given the following information, find the total revenue and marginal revenue at different output levels: |Price ($) |Output (units) |TR ($) |MR ($) | |50 |1 | | | |40 |2 | | | |30 |3 | | | |20 |4 | | | |10 |5 | | |

P.9
Test yourself
19.2
Given the following information, find the average cost and marginal cost at different output levels: |Output (units) |TC ($) |AC ($) |MC ($) | |0 |10 |- |- | |1 |20 | | | |2 |25 | | | |3 |30 | | | |4 |40 | | | |5 |60 | | |

P.14
Test yourself
19.3
Explain if the following statements are true, false or uncertain. a. ‘Average revenue and marginal revenue of a monopolist must be greater than zero.’ b. ‘A monopolist must produce at the output level where MR = MC.’

19.4
Given the following information about a monopolist in the long run, find the profit-maximising price and output of the firm under simple monopoly pricing. |Price ($) |Output (units) |TR ($) |TC ($) |MR ($) |MC ($) | |50 |1 | |20 | | | |40 |2 | |25 | | | |30 |3 | |35 | | | |20 |4 | |50 | | | |10 |5 | |70 | | |

Discuss
19.2
Is the profit-maximising output level under monopoly the same as the efficient output level that maximises total social surplus?

P.17
Test yourself
19.5
Do you agree with the following statements? Explain.
a. ‘Since there is only one firm in the market under monopoly, the firm can charge any price for its product.’ b. ‘Under simple monopoly pricing, the output level under monopoly must be inefficient.’

Discuss
19.3
Give examples of monopolists who charge different consumers different prices for the same product or service. Why do they charge different prices rather than the same price for a good?

P.20
Test yourself
19.6
Refer to Table 19.5. Calculate the total revenue and marginal revenue if the firm selling Good X to Mr Chan practises a. simple monopoly pricing;
b. perfect price discrimination.

P.25
Fig. 19.20
Is this an example of price discrimination?

P.27
Test yourself
19.7
Fill in the blanks with the given words.
Since business travellers have ________ (more / less) information about alternative accommodation, their demands for particular hotels are more elastic. Therefore, some hotels charge business travellers ________ (higher / lower) prices than non-business travellers for exactly the same rooms and services. These hotels are practising price discrimination.

19.8
Are the following examples of price discrimination? Explain. a. The price of an air...
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