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Which is true of a price-discriminating pure monopolist?

A price-discriminating pure monopolist is a single company that employs different pricing strategies to target different consumer groups and maximize its profits. This monopolist may target consumers with different levels of income, different levels of knowledge or different habits.

It charges different prices for each consumer group, depending on the consumer’s individual willingness to pay. This type of price discrimination allows the monopolist to maximize its profits by charging each consumer a price that is closer to the consumer’s willingness to pay.

This means that the monopolist can charge higher prices to consumers who are more willing and able to pay, while still achieving a profit. Additionally, price discrimination helps the monopolist to increase market share, as customers will be willing to purchase the product even if the price may be higher than those offered by competitors.

Which of the following is true of the pure monopolist?

A pure monopolist is a single firm that is the sole producer of a product with no close substitutes. This type of monopoly exists when a single company or entity has exclusive or dominant control of the market, allowing it to dictate the price of the product or service sold.

Compared to other forms of business organization, a pure monopolist has significantly more market power and can influence the market freely. They face little competition, which gives them the potential to earn high profits.

In some cases, governments may regulate a pure monopolist in order to protect consumers. This regulation may come in the form of price regulation, restricting the firm’s ability to raise prices too high, or other forms of regulation designed to promote competition.

Why is price discrimination associated with a pure monopoly?

Price discrimination is associated with a pure monopoly because it provides the monopolist with an incentive to lower prices for certain demographics or customers. In a monopolistic market, the sole provider of a good or service has the power to determine the pricing of its products or services.

A monopolist can use price discrimination to maximize profits by charging different prices to different customers depending on their willingness to pay. By offering lower prices to certain customers, the monopolist can increase its total sales, thereby generating more revenue.

Price discrimination can also increase the monopolist’s market power since it prevents them from competing with other firms. Furthermore, price discrimination can lead to more efficient markets since it reduces the welfare losses associated with relatively inefficient market outcomes.

By taking advantage of price discrimination, the monopolist can improve upon what would otherwise be a relatively inefficient outcome.

What are the 3 types of price discrimination?

The three types of price discrimination are first-degree, second-degree, and third-degree price discrimination.

First degree price discrimination is the most effective type of price discrimination and is when a seller charges each consumer the maximum price that they are willing to pay for a good or service. This allows for the seller to make the most profit from each customer.

Second-degree price discrimination is when a seller charges different prices based on the quantity of the good or service that a customer purchases. For example, customers that purchase multiple items may be offered a discounted price.

Third-degree price discrimination is when a seller divides consumers into different groups and charges a different price to each group. This type of price discrimination is often associated with industries such as accommodation and travel, where there are various packages and services available, and prices may be structured to appeal to specific customer groups.

For example, offering a discounted hotel stay to families or discounted flight tickets to students.

What happens when a monopoly perfectly price discriminates?

When a monopoly perfectly price discriminates, it charges different prices for its goods and services based on consumer willingness to pay. This type of pricing maximizes the firm’s profits by collecting the highest amount of money from each consumer segment.

For example, a tennis racket producer may charge $100 for its racket to a student who cannot afford to pay more, and $500 for the same racket to a professional tennis player who is willing to pay more.

In this situation, the producer is maximizing their profits since the professional is willing to pay more for the racket, while the student is still able to purchase the racket at a price they can afford.

Perfect price discrimination can be extremely effective in increasing profits, but the company is unable to take advantage of economies of scale since the prices are based on individual consumer willingness to pay, rather than the quantity of goods produced.

Therefore, companies that practice perfect price discrimination do not benefit from decreasing marginal costs, as they must charge each consumer separately.

Where does a perfectly price discriminating monopolist produce?

A perfectly price discriminating monopolist produces where marginal cost equals marginal revenue. That is, the monopolist produces at a quantity where the product’s price to consumers effectively exhausts the total demand for the good at that price.

As a result, the monopolist can charge each customer a different price, based on their individual willingness to pay. Since price discrimination makes it impossible for potential competitors to enter the market, the monopolist can maintain its monopoly power, ensuring it maximizes its profits.

Can you price discriminate in perfect competition?

No, it is not possible for a firm to price discriminate in perfect competition. Perfect competition exists when numerous firms are selling an identical product in a market. Each firm is so small relative to the total market that it has no influence in setting the price of his product.

Therefore, each firm has to accept the market price offered for his product. This eliminates any possibility of price discrimination between different customers. Additionally, perfect competition does not allow firms to distinguish the quality of their products because they are all selling the same product.

Therefore, it is not feasible for firms to price discriminate in a perfectly competitive market.

What price will this pure monopoly charge quizlet?

It is impossible to provide a definitive answer as to what price this pure monopoly will charge as it will depend on a variety of factors specific to the market. Generally speaking, however, a pure monopolist will set the price of its good or service so as to maximize profits.

This will typically involve setting the price at a level such that the marginal cost (the additional cost associated with producing an extra unit) is equal to the marginal revenue (the additional revenue associated with selling one more unit).

This process of price setting allows the monopolist to proceed to remain profitable despite having total market power.

Typically, a monopolist will then use price discrimination techniques to optimize profits further. This could involve charging different prices to different customers based on their perceived willingness to pay or setting different prices depending on the quantity of the good purchased.

Ultimately, competition and anti-trust laws keep a monopolist from charging a price too far above the competitive, or fair price, meaning a monopoly will always be incentivized to keep their prices as close as possible to what is deemed reasonable.

When a pure monopolist is producing its profit output price will quizlet?

When a pure monopolist is producing its profit-maximizing output price, it will set a price point that allows it to receive the most revenue while still staying above the marginal cost of producing the output.

This price point will be determined by the relative demand and supply conditions in the market. The monopolist will typically set its price above the point of marginal revenue and marginal cost. This will generate a greater level of profit than at any other price point.

This type of price setting maximizes profit, as it generates the most revenue with the least cost.

How is price determined in a monopoly quizlet?

In a monopoly, price is determined by the monopoly firm, who has no competition to take into account. The monopolist will set the price of a good or service that maximizes their profits, by taking into account both the quantity of the good or service they are producing as well as the demand for the good or service.

The maximization of profits usually means that the price charged is higher than the costs associated with producing and marketing the good or service. The firm will also consider the elasticity of demand.

If demand is inelastic, meaning that the consumers are not price sensitive, a monopolist can charge a higher price and still be successful in selling the product. On the other hand, if demand is elastic, meaning that the consumers are sensitive to price, a monopolist will have to charge lower prices and make up for the reduced revenue by increasing the quantity of the product.

Additionally, some government regulations may also influence the price of a monopoly. Finally, a monopolist can also use strategic behavior in setting prices, such as bundling products together, predatory pricing, or discriminatory pricing.

How do you determine the price for a pure monopolist?

The price for a pure monopolist is determined by the market forces of supply and demand. To begin, the monopolist must identify the profit maximizing level of output and total profit. This can be achieved by developing a demand function and a cost function so the monopolist can better understand the relationship between price, quantity, costs, and profits.

After the profit maximizing level of output is identified, the price of the good can be determined by using the demand function and the profit maximizing level of output. At the profit maximizing level of output, the monopolist will produce enough output to generate the maximum profit for a given price.

Once the price is determined the monopolist must decide whether to charge a single price or a two-part tariff. Depending on the market conditions and the objectives of the firm, the monopolist will then determine the price of the good.

What is the product of pure monopoly?

A pure monopoly is a market structure in which there is only one supplier of a particular good or service. This means the single firm is the sole producer in the industry and has complete control over the price of the product.

This means the firm is able to maximize its profits without any competition. Since there is no competition, the firm will set prices at a level higher than what would be possible in a competitive market.

The product of a pure monopoly is typically characterized by lack of competition, high barriers to entry, and high prices that generate high profits for the firm. The monopolist’s profits are not shared with, or taxed by, any other business.

Additionally, a pure monopoly will have no incentive to improve the quality or quantity of its product which can decrease the welfare of consumers.