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What is one disadvantage of Marginal cost pricing for monopolies?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. What is one disadvantage of Marginal cost pricing for monopolies?

2. What is one disadvantage of average cost pricing for monopolies?

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1. If Sam and Jack each produce the same quantity of appointments as would be produced in perfect competition, the total quantity of appointments is ___ the price per lesson would be ____ , and the economic profit of Sam and Jack would be____? 2. If Sam and Jack form a cartel and produce the same quantity of appointments as would be produced in a monopoly, the total quantity of appointments would be ____, the price per appointment is ____ and the economic profit of Sam and Jack is ____? 3. Would Sam and Jack have an incentive to break the cartel agreement and lower their price to increase the number of tennis lesson appointments?