# Which of the following is true under monopoly?

## Microeconomics- everything you need to know

Rapido, the shoe manufacturer, is so well-known that it has a monopoly. It sells 20 million pairs of shoes per year. Making more shoes has a low marginal cost, and it doesn’t change much if they make more shoes. Rapido’s marketing experts advise the CEO that reducing prices by 20% would result in a 20% increase in revenue, resulting in a 20% increase in profits. Is MC=MR, MC >MR, or MC MR, if the expert is right, at its current output?
Apollo, another highly successful shoe maker, also controls a large share of the market. It sells 15 million pairs of shoes each year and has comparable marginal costs to Rapido. Apollo’s marketing experts claim that rising costs by 20% will raise profits. Is MC=MR, MC greater than MR, or MC less than MR for Apollo?
The marginal cost of creating and selling one more unit of production is effectively zero when selling e-books, music on iTunes, and downloadable software: MC equals 0 Consider the possibility of a monopoly in this industry. What would marginal sales be at a company like this if the monopolist is doing all it can to boost profits?

## 1. which of the following is true under a monopoly? a

Amazon.com would be engaging in first-degree price discrimination if it charged each customer a different price for the most recent Harry Potter book based on their previous purchases.
Even if the three conditions for price discrimination are met, a business may not be able to price discriminate profitably due to the high costs of evaluating consumers’ willingness to pay and avoiding resale.
Which of the following is a price discrimination example? Aaron spends \$25 on a hardcover copy of Harry Potter and the Deathly Hallows, while Barbara waits six months and spends \$8 on a paperback copy of the same book.
Assume a book publisher is competing in two markets: market A has a price elasticity of demand of 6 and market B has a price elasticity of 1.5. How does a company price a book if the marginal cost of output is \$10? Market A’s price is \$12, while Market B’s price is \$30.
Excess ability has been criticized in monopolistically dominant companies operating in long-run equilibrium. This criticism stems from the fact that the company does not function in a price-to-marginal-cost environment.

### Monopoly in a free market | is it possible?

A monopolist is a person, community, or organization that has complete control over a market for a specific product or service.
A monopolist is likely to support policies that benefit monopolies because it gives them more leverage. Since consumers have no other options, a monopolist has no motivation to change their product. Instead, they are driven by the need to maintain the monopoly.
When a monopolist becomes the sole provider of a specific product or service, a monopoly is created. A monopsony, on the other hand, refers to a single entity’s exclusive power to buy a good or service. It’s also distinct from an oligopoly, which occurs when a small number of sellers control a market.

### Monopolistic competition- short run and long run- micro 4.4

The common view of monopoly emphasizes the societal costs of higher prices. The monopolist will charge a higher price (P1) than in a more competitive market due to the lack of competition (at P).
E, F, and B are the areas of economic welfare under perfect competition. If a monopoly takes over the market, the loss of consumer surplus is P P1 A B. E, P1, A, C are the latest areas of producer surplus at the higher price P1. As a consequence, region A B C reflects the total (net) loss of economic welfare.
The diagram below assumes that the average cost is constant and equal to the marginal cost (ATC = MC).
The equilibrium price and production in perfect competition are P and Q. If a single firm controls the market, the firm’s equilibrium is at P1 and Q1, where MC = MR. P, F, and A represent economic welfare in perfect competition, but P, F, C, and B represent economic welfare in monopoly. As a result, the area B, C, and A is where the deadweight loss occurs.
Creative destruction is a term associated with Joseph Schumpeter, who proposed that the dynamics of capitalism’s business cycle would cause some large inefficient firms to be destroyed by smaller new entrants. New companies would be able to take advantage of new technology and gain a competitive advantage over larger, more established firms who chose to use older technologies. In order to enter markets, new entrepreneurs are frequently willing to take risks and use new technologies. In certain ways, they stand to lose less than existing businesses. New technologies eventually replace older and outdated ones throughout the economy.