Monopoly pricing and price discrimination

Question 1

How profit maximising output is determined

Answer 1

Marginal revenue= Marginal cost then set the price according to demand curve

Question 2

Price discrimination

Answer 2

Charge different consumers different price for goods produced at the same cost

Question 3

Conditions for price discrimination

Answer 3

• Market is separable
• Elasticities of demand of sub-markets are different

Question 4

Price fixing

Answer 4

Fix the price of products

Question 5

Sales and production quotas

Answer 5

Restrict market supply

Question 6

Joint boycott

Answer 6

Force not to trade with others

Question 7

Tie-in sales

Answer 7

Buyers required to buy another product when buying a product

Question 8

Bundling

Answer 8

Sell two or more goods together as a package

Question 9

Exclusive dealing

Answer 9

Required to deal with one supplier only

Question 10

Merger

Answer 10

Merge with other firms

Question 11

Harms to customers for anti competitive behaviours

Answer 11

• Higher market price
• Lack of choice
• Poor product quality

Question 12

Concerns for introducing competition policy

Answer 12

• Increase cost of production
• High administrative costs

Question 13

Effect on quantity and price when a monopoly turns to a perfect competition

Answer 13

Price decreases and quantity increases as output is decided at MC=MB

Question 14

First conduct rule

Answer 14

Anti-competitive agreement

Question 15

Second conduct rule

Answer 15

Abuse of market power