8. If DeBeers has a monopoly in the diamond market, then: a. DeBeers must be en

Question

8. If DeBeers has a monopoly in the diamond market, then: a. DeBeers must be en b. th eBeers must be engaging in perfect price discrimination if it is charging every customer the same price for a diamond. e marginal revenue of selling one more diamond is greater than the price of that diamond if DeBeers cannot price discriminate the marginal revenue of selling one more diamond is less than the price of that diamond if DeBeers cannot price discriminate. the market demand for diamonds is perfectly elastic. c. d. The Sudsy Soap company places coupons, giving consumers 50 cents off the price ofa bottle of liquid soap, in the local newspaper. This strategy makes more sense than simply lowering the price for all consumers because: 9. a the company only wants to sell soap to consumers who are willing to clip coupons. b. those consumers who are unwilling to clip coupons are not in the market for soap c. consumers with a more elastic demand will use the coupon to get a lower price, but consumers with inelastic demand are willing to pay full price. d. consumers with a more inelastic demand will use the coupon to get a lower price, but consumers with elastic demand are willing to pay full price. A monopolist that earns positive economic profit in the short run will: a. always continue to earn positive economic profit in the long run. 10. to entry, assuming no changes in costs or market demand. c earn higher economic profit in the long run because of economies of scale. d. earn zero economic profit in long-run equilibrium.

Explanation / Answer

First question is answered below

1. Correct option: (c)

Reason: Since monopolies operate for profit maximization, they charge price at the point MR = MC.

This price is much higher than the marginal revenue obtained per unit and is also much higher than the socially optimal level of output.

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