Question

In: Economics

A monopolist is a: Price taker Price maker Efficient firm Firm with high consumer welfare

A monopolist is a:

Price taker

Price maker

Efficient firm

Firm with high consumer welfare

Solutions

Expert Solution

Answer- Price maker

A monopolist is a price maker. When an individual firm has market power to influence the price of the commodity, then the firm is said to be a price maker. A monopoly is a market structure in which there is only a single seller of the product, which has no close substitutes. There are high barriers to entry in monopoly market. As a single firm supplies for the whole market, the monopolist has market power to influence the price of the product. Hence, a monopolist is a price maker.

Option Price taker is incorrect because a monopolist is not a price taker. A firm is said to be a price taker when firm has no market power so as to influence the price of the product. As such, the firm sells its product at the market determined price and cannot influence the price of the product.

Option Efficient firm is Incorrect because a monopolist does not produce that level of output where average total cost is minimum. Hence, it produces an output less than the efficient level of output. Hence, it is not an efficient firm.

Option firm with high consumer welfare is Incorrect because a monopolist is a firm which reduces consumer welfare. The price charged by the monopolist is high and consumer welfare is minimised.


Related Solutions

what it means by price taker firm
what it means by price taker firm
A firm in a competitive market is a price taker (recall that this is true for...
A firm in a competitive market is a price taker (recall that this is true for every firm and every customer in a perfectly competitive market). For this example, the market equilibrium price is $6. The firm’s total cost (TC) function is made up of Fixed Cost (FC, which does not vary with quantity) and Variable Cost (VC, which does vary with quantity). The TC function for this firm is: TC = 10 + 2Q – 0.2Q2 + 0.01Q3 a)...
1. A perfectly competitive firm is a price taker because Its products are differentiated. The price...
1. A perfectly competitive firm is a price taker because Its products are differentiated. The price of the product is determined by many buyers and sellers. It has market power. Market supply is upward-sloping. 2. When the short-run marginal cost curve is upward-sloping, The average total cost curve is above the marginal cost curve. The average total cost curve is upward-sloping Diminishing returns occurs with greater output. 3. If a perfectly competitive firm is producing a rate of output at...
A) If a firm is a price taker its marginal revenue is: Constant Decreasing as quantity...
A) If a firm is a price taker its marginal revenue is: Constant Decreasing as quantity produced increases Increasing as quantity produced increases Zero B) If a non-price taking firm produces where demand is inelastic, marginal revenue will be... ​​ positive zero negative imaginary C) For non-price taking firms-- which of the following statements are true. ​​​​​​​​​​​​​​ The firms markup depends on the elasticity of demand for the firms product. The firms marginal revenue decreases as output increases. The firm's...
The supply curve of a price-taker firm in the short run is the: Group of answer...
The supply curve of a price-taker firm in the short run is the: Group of answer choices firm's average variable cost curve. portion of the firm's average total cost curve that lies above average variable cost curve. portion of the firm's marginal cost curve that lies above average variable cost curve. firm's marginal revenue curve.
Is the free market equilibrium (i.e. allocatively efficient) the point at which social welfare (i.e. consumer...
Is the free market equilibrium (i.e. allocatively efficient) the point at which social welfare (i.e. consumer surplus + producer surplus - deadweight loss) is maximised? Moreover, do Pigouvian (assuming to tax accurately captures the effect of the externality) taxes necessarily lead to an increase in social welfare?
7. Price discrimination and welfare Suppose Barefeet is a monopolist that produces and sells Ooh boots,...
7. Price discrimination and welfare Suppose Barefeet is a monopolist that produces and sells Ooh boots, an amazingly trendy brand with no close substitutes. The following graph shows the market demand and marginal revenue (MR) curves Barefeet faces, as well as its marginal cost (MC), which is constant at $40 per pair of Ooh boots. For simplicity, assume that fixed costs are equal to zero; this, combined with the fact that Barefeet's marginal cost is constant, means that its marginal...
1. A single firm in a perfectly competitive market is a price taker? True or False....
1. A single firm in a perfectly competitive market is a price taker? True or False. Explain with examples. 2. What is the supply curve of a perfectly competitive firm? Is it different from that of the market supply curve? Explain. 3.If a firm makes a loss in the short run, then it would shut down? If no, discuss. If yes, discuss.Offer examples 4. Does the monopolist have a supply curve? Discuss
A perfectly competitive firm is a price taker because: It has a relatively large degree of...
A perfectly competitive firm is a price taker because: It has a relatively large degree of control over price It has been able to differentiate its product from others in the industry There are a small number of firms in the industry It produces a very large percentage of total output It produces a very small percentage of total output
Like the monopolist, you are a price-maker. But suppose you can practice access pricing. Demand is...
Like the monopolist, you are a price-maker. But suppose you can practice access pricing. Demand is P=50-0.05Q and you can produce each unit of output for $30 a unit. That is, AC=MC=$30. To make the story right each potential customer has this demand of P=50-0.05Q. You need to draw a graph to answer some parts below. What first price or access price should you charge?
 What is the 2ndprice or price per unit of output that you should charge? How...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT