monopoly_heterogeneous

monopoly_heterogeneous - 1. A restaurant chain has to...

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1. A restaurant chain has to choose how many stores to open in a city. Assume it o/ers free delivery. Then it will open a socially excessive number of stores. True or false. Explain. 2. A monopolist can produce a low or high quality product. All consumers care the same for the low quality product but prefer the high quality one. However not all consumers care the same about the high quality product. Which of the following is±are true? (a) The monopolist may choose to sell the low quality product even when it is socially e¢ cient to sell the high quality one. (b) If the cost of production of either product is the same, the mo- nopolist will always choose to sell the high quality product. (c) The monopolist may choose to sell the high quality product even when it is socially e¢ cient to sell the low quality one. True or False. Explain. than one that does not. True or False. Explain. 5. Consumers are better o/ when a monopolist o/ers more variety.
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This note was uploaded on 10/15/2008 for the course ECON 171 taught by Professor Hopenhayn during the Spring '07 term at UCLA.

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monopoly_heterogeneous - 1. A restaurant chain has to...

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