1. Market separation (to avoid seepage or arbitrage) – a monopolist must be able to keep the markets separate either in terms of distance or time to avoid the product being bought in the cheaper market and sold in the more expensive market at prices below the monopoly price.
2. Difference in elasticities of demand in different markets – this makes it possible the charging of a higher price in the inelastic demand market and a lower price in elastic demand market.
3. Total control over production (supply) of a product which has no close substitute. An example of price discrimination are the bus fares charged by KBS at different times of the day. In the mornings and evenings (peak hours) the demand for transport is higher and more inelastic than during the rest of the day. Hence fares are higher in the morning and in the evening than during the rest of the day.
Wilfykil answered the question on February 7, 2019 at 08:10
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The table below represents estimated national income values for hypothetical economy X in millions of shillings:
Gross National Product (at market prices) = 389.2
Depreciation allowance =...
(Solved)
The table below represents estimated national income values for hypothetical economy X in millions of shillings:
Gross National Product (at market prices) = 389.2
Depreciation allowance = 47.0
Indirect taxes less subsidies = 42.4
Business taxes = 11.4
Personal income taxes = 66.3
Government transfers = 59.3
Retained profits = 13.0
Based on the information provided, calculate the Net National Product at market price, the Net National Income (at factor cost), Personal Income and the disposable income for this economy
Date posted:
February 7, 2019
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Answers (1)
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Distinguish between Gross National and Gross Domestic products and account for the lower values of the former in developing economies.
(Solved)
Distinguish between Gross National and Gross Domestic products and account for the lower values of the former in developing economies.
Date posted:
February 7, 2019
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Answers (1)
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Given the following data in millions of shillings pertaining to an economy, determine Net National and
Gross National Product Values.
National income: 3,387
Indirect...
(Solved)
Given the following data in millions of shillings pertaining to an economy, determine Net National and
Gross National Product Values.
National income: 3,387
Indirect business taxes (less subsidies): 366
Depreciation: 455
Date posted:
February 7, 2019
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Answers (1)
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Suggest economic measures to curb inflation
(Solved)
Suggest economic measures to curb inflation
Date posted:
February 7, 2019
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Answers (1)
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what is the effect of high and rising inflationary rate on the rate of interest?
(Solved)
what is the effect of high and rising inflationary rate on the rate of interest?
Date posted:
February 7, 2019
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Answers (1)
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Define the term hyperinflation.
(Solved)
Define the term hyperinflation.
Date posted:
February 7, 2019
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Answers (1)
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What are the determinants of demand for labor?
(Solved)
What are the determinants of demand for labor?
Date posted:
February 7, 2019
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Answers (1)
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By use of diagrams, illustrate and explain the resultant changes on the equilibrium price and quantity from a simultaneous fall in price of a substitute...
(Solved)
By use of diagrams, illustrate and explain the resultant changes on the equilibrium price and quantity from a simultaneous fall in price of a substitute and an increase in the cost of raw materials for a specific commodity.
Date posted:
February 7, 2019
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Answers (1)
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Bring out the salient features of a monopoly market model.
(Solved)
Bring out the salient features of a monopoly market model.
Date posted:
February 7, 2019
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Answers (1)
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A monopolistic firm with a linear demand curve finds that it can sell two units at Sh.12 or twelve units at Sh.2. Its fixed cost...
(Solved)
A monopolistic firm with a linear demand curve finds that it can sell two units at Sh.12 or twelve units at Sh.2. Its fixed cost is Sh. 20 and its marginal cost is constant at Sh. 3 per unit. Derive and plot the following:
Marginal cost, average total cost, marginal revenue and demand curves for this firm.
Date posted:
February 7, 2019
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Answers (1)
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Illustrate and explain the three stages associated with the law of variable proportions
(Solved)
Illustrate and explain the three stages associated with the law of variable proportions
Date posted:
February 7, 2019
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Answers (1)
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Argue for and against international trade restrictions.
(Solved)
Argue for and against international trade restrictions.
Date posted:
February 7, 2019
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Answers (1)
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Distinguish between a tariff and a quota as applied in International Trade.
(Solved)
Distinguish between a tariff and a quota as applied in International Trade.
Date posted:
February 7, 2019
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Answers (1)
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Under what conditions is price discrimination possible?
(Solved)
Under what conditions is price discrimination possible?
Date posted:
February 7, 2019
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Answers (1)
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You have been hired as a consultant by a firm producing bread to advise on a pricing strategy that would
enable the firm to maximize profits....
(Solved)
You have been hired as a consultant by a firm producing bread to advise on a pricing strategy that would
enable the firm to maximize profits. This firm is a monopolist which sells in two distinct markets, one of
which is completely sealed off from the other.
As part of the analysis, you establish that the total demand for the firm‟s output is given by the
following equation:
Q = 50 – 0.5P
and the demand for the firm‟s output in the two markets is given by the following equations:
Q1 = 32 – 0.4P1 and
Q2 = 18 – 0.1 P2
Where: Q = total output
P = Price
Q1 = Output sold in Market 1
Q2 = Output sold in Market 2
P1 = Price charged in Market 1
P2 = Price charged in Market 2
The cost of production is given by C = 50 + 40Q
Where C = total cost of producing bread.
How much profit would the firm earn if it sold the output at a single price, and if it discriminates?
Date posted:
February 7, 2019
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Answers (1)
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You have been hired as a consultant by a firm producing bread to advise on a pricing strategy that would
enable the firm to maximize profits....
(Solved)
You have been hired as a consultant by a firm producing bread to advise on a pricing strategy that would
enable the firm to maximize profits. This firm is a monopolist which sells in two distinct markets, one of
which is completely sealed off from the other.
As part of the analysis, you establish that the total demand for the firm‟s output is given by the
following equation:
Q = 50 – 0.5P
and the demand for the firm‟s output in the two markets is given by the following equations:
Q1 = 32 – 0.4P1 and
Q2 = 18 – 0.1 P2
Where: Q = total output
P = Price
Q1 = Output sold in Market 1
Q2 = Output sold in Market 2
P1 = Price charged in Market 1
P2 = Price charged in Market 2
The cost of production is given by C = 50 + 40Q
Where C = total cost of producing bread.
What price must be charged in each market in order to maximize profits?
Date posted:
February 7, 2019
.
Answers (1)
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You have been hired as a consultant by a firm producing bread to advise on a pricing strategy that would
enable the firm to maximize profits....
(Solved)
You have been hired as a consultant by a firm producing bread to advise on a pricing strategy that would
enable the firm to maximize profits. This firm is a monopolist which sells in two distinct markets, one of
which is completely sealed off from the other.
As part of the analysis, you establish that the total demand for the firm‟s output is given by the
following equation:
Q = 50 – 0.5P
and the demand for the firm‟s output in the two markets is given by the following equations:
Q1 = 32 – 0.4P1 and
Q2 = 18 – 0.1 P2
Where: Q = total output
P = Price
Q1 = Output sold in Market 1
Q2 = Output sold in Market 2
P1 = Price charged in Market 1
P2 = Price charged in Market 2
The cost of production is given by C = 50 + 40Q
Where C = total cost of producing bread.
Determine the total output that the firm must produce in order to maximize profits.
Date posted:
February 7, 2019
.
Answers (1)
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Given a hypothetical consumption function of the form:
C = a + bYd
Where Yd = Y – T
And Y = Income
...
(Solved)
Given a hypothetical consumption function of the form:
C = a + bYd
Where Yd = Y – T
And Y = Income
T = Taxes and that:
Government spending and investment are exogenously determined at G and I respectively: Determine Government Spending
Multiplier.
Date posted:
February 7, 2019
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Answers (1)
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What is the relationship between the simple multiplier and marginal propensity to consume?
(Solved)
What is the relationship between the simple multiplier and marginal propensity to consume?
Date posted:
February 7, 2019
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Answers (1)
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Based on the circular flow of income analysis, explain why marginal propensity to consumer
plus marginal propensity to save equals one.
(Solved)
Based on the circular flow of income analysis, explain why marginal propensity to consumer
plus marginal propensity to save equals one.
Date posted:
February 7, 2019
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Answers (1)