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Questions › JNU › JNU SIS 2018 › Q15
2 marks, −1Microeconomics › Monopoly and price discrimination › Natural monopoly and regulationModerateabout 2 min

JNU SIS 2018 Question 15: Monopoly and price discrimination

Good XXX is being produced by only one firm, firm AAA. Now, suppose a second firm, firm BBB enters the industry and starts producing good XXX. Firm BBB finds that if it charges the price that firm AAA was originally charging, then it will make a loss. Which of the following could be true?

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Good X is being produced by only one firm, firm A. Now, suppose a second firm, firm B enters the industry and starts producing good X. Firm B finds that if it charges the price that firm A was originally charging, then it will make a loss. Which of the following could be true? (A) Good X is being produced in a natural monopoly (B) Good X is being produced in a regular, but contestable monopoly (C) Firms A and B are symmetric Bertrand duopolists (D) Firm B must have lower costs of production than firm A

Monopoly and price discrimination has come up 128 times in 7 exams since 2004.

What this question tests

This question is on Natural monopoly and regulation, part of Monopoly and price discrimination in Microeconomics.

Why some industries have a single efficient producer, and how to regulate one.

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