G202 KREFT EXAM SCRIPT 2 2026 COMPLETE
QUESTIONS AND VERIFIED SOLUTIONS
◉ What percent market power does a monopoly have? Answer:
100%
◉ Market Strategies (4) Answer: 1. Guarding Trade Secrets
2. Control of an essential resourse
3. Exclusive contracts and customers lock in
4. Collusion (Form a cartel and act as a monopoly)
◉ Non-Market Strategies (4) Answer: 1. Patent or copyright
protection
2. Trade regulations
3. Government Licensing
4. Government or NGO certification
◉ Optimal Sales Target Answer: Profit maximizing sales target
occurs where MR=MC
◉ If MR>MC... Answer: the firm could make a profit by selling one
more unit
, ◉ If MC>MR... Answer: the firm would lose money one selling the
unit
◉ Optimal Price Answer: Given optimal sales target, price is found
as a markup over cost, where the markup factor depends on the
demand of the product
◉ A firm with market power sets price ___________ and output
___________ than efficient levels Answer: Higher, Lower
◉ Perfect Price Discrimination Answer: Each consumer is charged a
price equal to her willingness to pay
◉ During Perfect Price Discrimination (2) Answer: -No social
inefficiency occurs, but all market surplus goes to producer (CS=0)
-Profits increased relative to using a single price
◉ Imperfect Price Discrimination Answer: Groups of consumers are
charged different prices
◉ During Imperfect Price Discrimination Answer: -Profits increased
relative to single price, not as high as perfect price disc.
-Consumer surplus decreased, but not equal to zero
QUESTIONS AND VERIFIED SOLUTIONS
◉ What percent market power does a monopoly have? Answer:
100%
◉ Market Strategies (4) Answer: 1. Guarding Trade Secrets
2. Control of an essential resourse
3. Exclusive contracts and customers lock in
4. Collusion (Form a cartel and act as a monopoly)
◉ Non-Market Strategies (4) Answer: 1. Patent or copyright
protection
2. Trade regulations
3. Government Licensing
4. Government or NGO certification
◉ Optimal Sales Target Answer: Profit maximizing sales target
occurs where MR=MC
◉ If MR>MC... Answer: the firm could make a profit by selling one
more unit
, ◉ If MC>MR... Answer: the firm would lose money one selling the
unit
◉ Optimal Price Answer: Given optimal sales target, price is found
as a markup over cost, where the markup factor depends on the
demand of the product
◉ A firm with market power sets price ___________ and output
___________ than efficient levels Answer: Higher, Lower
◉ Perfect Price Discrimination Answer: Each consumer is charged a
price equal to her willingness to pay
◉ During Perfect Price Discrimination (2) Answer: -No social
inefficiency occurs, but all market surplus goes to producer (CS=0)
-Profits increased relative to using a single price
◉ Imperfect Price Discrimination Answer: Groups of consumers are
charged different prices
◉ During Imperfect Price Discrimination Answer: -Profits increased
relative to single price, not as high as perfect price disc.
-Consumer surplus decreased, but not equal to zero
