Question

Which of the following are sources of market power for a monopolist? Choose all of the correct items.

*a firm may have a patent or copyright

*a firm may control critical resources

*a firm may have a government-authorized franchise

*a firm may enjoy economies of scale

Choose all of the following correct items that are possible ways to avoid price wars:

*customer segmentation with revenue management

*growing the market

*reference prices and framing effects

*to not start one

Answer 1

Answer 1:

All the options mentioned represents sources of monopoly power for a monopolist. A monopolist may have the market power because a firm many have a patent or copyright, it may have control over critical resource, it may have government authorized franchise and it many enjoy economes of scale over large amount of the output produced or it may be a natural monopoly.

Answer 2:

The possible ways to avoid price wars are customer segmentation with revenue management and growing the market.