08 Jun Question Unit 9—Monopoly
Question
Unit 9—Monopoly
For many years Keurig held a patent on the design of the K-Cup, which prevented other firms from
making pods that would work with Keurig coffee makers. Using the diagram below:
1. What is the efficient price? _____ Quantity? _____
2. What is the price (_____) and quantity (_____) if Keurig acts as a monopolist? Is the monopoly
price higher or lower than the efficient price? What happened to quantity?
3. Shade in consumer surplus, producer surplus, and deadweight loss when Keurig is a monopolist.
5 4 3 Price
2 1 0 0 1 2 3 4 5 6 7 8 9 10 Quantity
Multiple choice questions:
1. Which of the following is a characteristic of a monopoly?
a. The firm produces a product that has many close substitutes.
b. There are barriers to entry in the market.
c. The firm has no control over price.
d. The firm’s demand curve is perfectly elastic.
2. Assume someone organizes all bread producers in the nation into a monopoly.
Which of the following will occur?
a. Consumer surplus decreases and deadweight losses are created
b. Deadweight losses are created and economic profit increases
c. Consumer surplus decreases and economic profit increases
d. Consumer surplus decreases, deadweight losses are created, and economic profit increases
3. A monopolist can make an economic profit in the long run because of
a. the many firms that produce in the market.
b. product homogeneity.
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