Multiple Choice
Which of the following reasons explains why a professional sports team can be considered a monopoly?
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12. Monopoly
Characteristics of Monopoly
Multiple Choice
Which of the following is true for a non price discriminating monopoly?
A
It produces at the point where price equals marginal cost.
B
It faces a perfectly elastic demand curve.
C
It sets different prices for different consumers based on their willingness to pay.
D
It charges the same price to all consumers for the same product.
Verified step by step guidance1
Understand the concept of a non price discriminating monopoly: it is a monopolist that charges a single price for its product to all consumers, regardless of their willingness to pay.
Recall that a monopoly maximizes profit by producing the quantity where marginal revenue (MR) equals marginal cost (MC), not where price equals marginal cost, which is typical of perfect competition.
Recognize that a monopoly faces a downward sloping demand curve, meaning it does not face a perfectly elastic demand curve; instead, the demand curve reflects the relationship between price and quantity demanded.
Know that price discrimination involves charging different prices to different consumers based on their willingness to pay, which a non price discriminating monopoly does not do.
Conclude that the true statement for a non price discriminating monopoly is that it charges the same price to all consumers for the same product.
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