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Exam
Name___________________________________

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) One peanut seller in the park 1) _______
A) is a local monopoly.
B) is a perfectly competitive firm in a small market.
C) is an oligopoly.
D) is a monopoly.
Answer: B

2) One difficulty in identifying a monopoly is: 2) _______

A) estimating firm's marginal revenue. B) estimating firm's marginal cost
functions.
C) estimating demand elasticities. D) defining the relevant market.
Answer: D

3) The marginal revenue curve: 3) _______

A) is the change in total revenue when one more unit is produced.
B) is never equal to the average revenue.
C) is the change in total revenue for a change in output.
D) is always less than price.
Answer: C

4) The least ambiguous definition of a monopoly involves markets with: 4) _______

A) only one firm offering a product.
B) small cross-price elasticities between products.
C) large cross-price elasticities between products.
D) interdependent pricing decisions.
Answer: B

5) Suppose a monopolist faces the demand curve Yd=1600-400 P. Which of the following is 5) _______
correct?
A) MR = 1600-200 P B) TR = 1600-400P2
C) AR = 1600- 200P D) Profit = 1600P - 400P2- MC
Answer: A

6) A firm is a monopoly if: 6) _______

A) MR increases with output.
B) no other firm produces the same good or a close substitute.
C) its AC is falling as output rises.
D) MR decreases with output.
Answer: B

7) Marginal revenue and elasticity: 7) _______

A) are inversely related.
B) are positively related.
C) are unrelated.
D) are related only when the demand curve is linear.
Answer: B

8) Which of the following equations accurately describes the marginal revenue of a monopolist? 8) _______
 A) MR(y) = (p/y)(1/slope) B) MR(y) = py - (1/slope)
C) MR(y) = p - y(slope) D) MR(y) = d(AR)/dy
Answer: C

9) Two goods are close substitutes if: 9) _______

A) one good is own-price inelastic and the other is own-price elastic.
B) they are both inferior goods.
C) the cross-price elasticities of demand are low.
D) the cross-price elasticities of demand are large.
Answer: D

10) Profit maximizing monopolists set their prices: 10) ______

A) as low as possible. B) at a convenient level.
C) by finding MR = MC. D) as high as possible.
Answer: C

11) Which of the following statements about elasticity are true for a monopolist? 11) ______
A) a monopolist's demand curve always income elastic
B) when marginal revenue is positive, demand is price elastic
C) marginal revenue revenue is maximized when elasticity is equal to one
D) when marginal revenue is negative, demand is price elastic
Answer: B

12) Individuals that receive income from royalties often want: 12) ______
A) to maximize the volume of sales. B) to maximize the profits of the firm.
C) higher prices for the product. D) lower prices for the product.
Answer: D

13) The fundamental difference between a perfectly competitive and monopolistic profit 13) ______
maximization problem is that, in a competitive market MR:
A) is fixed while in a monopoly it diminishes as quantity increases.
B) diminishes as quantity increases while in a monopoly it increases.
C) diminishes as quantity increases while in a monopoly it is fixed.
D) increases as quantity increases while in a monopoly it is fixed.
Answer: A

14) If the market demand curve has an elasticity of -4, then the marginal revenue for a monopolist: 14) ______
A) is not related to the price. B) is three-quarters of the price.
C) is half the price. D) is equal to the price.
Answer: B

15) Suppose the market demand curve has an elasticity of -4. If the monopolist's average cost is a 15) ______
horizontal straight line, then the profit is:
A) one quarter of total revenue. B) equal to the total revenue.
C) half the total revenue. D) not related to the total revenue.
Answer: A

16) Suppose the price elasticity of demand at the profit maximizing output for a monopolist is -3. If 16) ______
the monopolist's marginal cost is $6 per unit, what is the profit maximizing price?
A) 9 B) 3 C) 12 D) 6
Answer: A
17) If a monopolist's price is twice the marginal cost, the price elasticity of demand is: 17) ______
A) -1/2. B) -2. C) -1/3. D) -1.
Answer: B

18) Last year, the price elasticity of demand for a monopolist -3. This year, the price elasticity 18) ______
decreased to -4. From last year to this year, the monopoly markup has:
A) remained the same. B) increased.
C) decreased. D) we cannot conclude.
Answer: C

19) From last year to this year, the markup of a monopoly has decreased. We can conclude that, in 19) ______
absolute value, the price elasticity of demand has:
A) we cannot conclude. B) increased.
C) remained the same. D) decreased.
Answer: B

20) The average revenue function is: 20) ______

A) downward sloping.
B) equal to marginal revenue divided by quantity.
C) identical to the demand function.
D) identical to the marginal revenue function.
Answer: C

21) If output is positive, a monopolist's MR is: 21) ______

A) less than price. B) greater than price.
C) zero. D) equal to price.
Answer: A

22) A monopolist: 22) ______

A) earns a profit only in the long run.
B) must set price equal to average cost and earns zero profit.
C) earns above the competitive rate of return in the long run.
D) always earns a profit.
Answer: C

23) The relationship between MR and p means that when demand is elastic, marginal revenue is: 23) ______
A) negative. B) undefined. C) zero. D) positive.
Answer: D

24) If a monopolist faces a demand curve given by p = a - by, then TR is maximized when: 24) ______
A) p = a/b. B) MR(y) = a - 2by = MC(y).
C) y = a/b. D) y = a/(2b).
Answer: D

25) All but which one of the following statements are true, given a downward-sloping linear 25) ______
demand function?
A) When TR is falling, price exceeds MR.
B) When TR is at a maximum, MR is zero.
C) When the TR is increasing, AR is falling.
D) MR is less than AR for all positive quantities.
Answer: C
26) A downward-sloping AR curve implies that: 26) ______
A) profits are decreasing as price falls.
B) AR is below MR at all positive levels of output.
C) price is falling as output rises.
D) TR is falling as output increases.
Answer: C

27) Which of the following statements about the profit maximizing quantity of output is false? 27) ______
A) Total Revenue = Total Cost B) Marginal Revenue = Marginal Cost
C) the TR and TC curves are parallel D) the Profit curve is flat
Answer: A

28) A book vendor can produce a book at a constant MC equal to zero, and its potential buyers have 28) ______
the following reservation prices: $55, $50, $45, $40, $35, $30, $25, $20, $15, $10, $5. If the book
vendor must announce a take it or leave it price (i.e., he cannot price discriminate), what price
maximizes profits?
A) $25 B) $35 C) $30 D) $40
Answer: C

29) A book vendor can produce a book at a constant MC equal to zero, and its potential buyers have 29) ______
the following reservation prices: $55, $50, $45, $40, $35, $30, $25, $20, $15, $10, $5. What are the
unrealized gains from trade if the monopolistic vendor chooses p = $25?
A) $50 B) $45 C) $65 D) $155
Answer: A

30) A book vendor can produce a book at a constant MC equal to zero, and its potential buyers have 30) ______
the following reservation prices: $55, $50, $45, $40, $35, $30, $25, $20, $15, $10, $5. Suppose the
book vendor can identify each buyer's reservation price and is able to set an individual price for
each buyer. In order to maximize profits, the monopolist will sell:
A) 11 books. B) 12 books. C) 10 books. D) 8 books.
Answer: A

31) In the case of a monopoly, the supply curve: 31) ______

A) is given by the marginal cost curve above average variable cost.
B) is given by the marginal revenue curve.
C) does not exist.
D) is given by the demand curve.
Answer: C

32) If MR is greater than MC, a profit maximizing monopolist should: 32) ______
A) hold output constant. B) calibrate all machinery.
C) increase output. D) decrease output.
Answer: C

33) If MC is greater than MR, a profit maximizing monopolist should: 33) ______
A) hold output constant. B) calibrate all machinery.
C) increase output. D) decrease output.
Answer: D

34) An unregulated monopolist produces an output level in the elastic portion of the demand curve 34) ______
because:
A) TR increases at the same rate as TC; that is, MR = MC.
 B) prices, and profits, rise.
C) it is only in this region that MR is positive.
D) it is only in this region that price exceeds AC.
Answer: C

35) If p = 20 - y and TC(y) = 4y, then when y = 4: 35) ______

A) profits are zero. B) profits are positive.
C) profits are maximizing. D) profits are negative.
Answer: B

36) If p = 20 - y and TC(y) = 8y, then a profit-maximizing monopolist will set a price equal to: 36) ______
A) 12. B) 8. C) 7. D) 14.
Answer: D

37) A necessary condition for a monopolist to maximize profit is that: 37) ______
A) it is producing at the minimum of its AC function.
B) the slope of the TC and TR functions are the same.
C) the TC curve is upward sloping.
D) the last unit produced reduced revenue and cost by the same amount.
Answer: B

38) If p = 10 - y and TC(y) = 4y, then AC: 38) ______

A) falls as output increases.
B) increases as output increases.
C) is rising at low output and falling at high output.
D) is independent of output.
Answer: D

39) Suppose a profit maximizing monopolist has total costs C(Y) = 10Y. The monopolist is charging a 39) ______
profit maximizing price or p = 15. If market demand has a constant price elasticity, then the price
elasticity of demand must be equal to:
A) 3/2. B) 3. C) 1. D) 2/3.
Answer: B

40) Suppose a proportional tax is imposed on a monopolist's profits. Relative to the pretax situation, 40) ______
the monopolist will:
A) produce the same output, increase the price, and pass the tax to consumers.
B) produce less, decreasing TC.
C) encourage new firms to enter and share the tax burden.
D) produce the same output and charge the same price as before the tax.
Answer: D

41) Suppose a monopoly has strictly positive marginal costs. Compared to the profit maximizing 41) ______
output, the output that maximizes sales revenue is:
A) higher. B) cannot be compared.
C) equal. D) lower.
Answer: D

42) A proportional tax on a monopolist's profits will: 42) ______

A) lead to an increase in output accompanied by a fall in profits.
B) lead to a decrease in output and a rise in profits.
C) leave both profits and output unchanged.
 D) have no effect on output.
Answer: D

43) Suppose a specific excise tax is imposed on a monopolist's product. In order to maximize profits, 43) ______
the monopolist will produce:
A) more output and charge a lower price.
B) the same output and charge a higher price.
C) the same output and charge the same price as before the tax.
D) less output and charge a higher price.
Answer: D

44) A profit maximizing monopolist will change its price in response to all but which one of the 44) ______
following?
A) increase in its FC
B) an upward shift in its variable cost curve
C) an increase in a sales tax imposed on its product
D) a rightward shift in its demand curve
Answer: A

45) A monopoly faces the following demand curve P = 100 - y and MC = 20. The profit-maximizing 45) ______
price and quantity are, respectively:
A) $45; 55. B) $80; 20. C) $40; 60. D) $60; 40.
Answer: D

46) Consider a monopoly with inverse demand function p = 20 - y and cost function c(y) = 4 + y2. The 46) ______
profit maximizing output is:
A) 4. B) 5. C) 10. D) 2.
Answer: B

47) Consider a monopoly with inverse demand function p = 20 - y and cost function c(y) = 4 + y2. The 47) ______
profit maximizing price is:
A) $5. B) $15. C) $25. D) $10.
Answer: B

48) Consider a monopoly with inverse demand function p = 20 - y and cost function c(y) = 4 + y2. The 48) ______
maximum profit is equal to:
A) 55. B) 46. C) 12. D) 36.
Answer: B

49) The marginal revenue of a good that costs $5 and has an own-price elasticity (in absolute value) 49) ______
equal to 0.2 is:
A) -20. B) 20. C) 10. D) -10.
Answer: A

50) The total cost function for a monopolist is TC = 100 + 4Q2. If the demand for the monopolist's 50) ______
output can be expressed as P = 120 - 2Q, the deadweight loss to society of this monopoly is equal
to:
A) 40. B) 20. C) 60. D) 100.
Answer: B

51) The deadweight loss of monopoly is caused by: 51) ______

A) the marginal cost exceeding marginal value.
 B) the marginal cost exceeding the marginal revenue.
C) average costs exceeding average revenue.
D) too little output being produced.
Answer: D

52) Monopolies are inefficient for all but which of the following reasons? 52) ______
A) Price is greater than Marginal Cost.
B) The sale of additional units is Pareto-improving.
C) The total surplus represents worker exploitation.
D) The potential surplus is unrealized.
Answer: C

53) An unregulated monopolist is inefficient because: 53) ______

A) price exceeds MC at the profit maximizing output.
B) the MC of the last unit produced exceeds market price.
C) not all market demand is satisfied at the profit-maximizing price.
D) the monopolist has no incentive to minimize costs of production.
Answer: A

54) Monopolies are considered inefficient when compared to perfect competition because 54) ______
A) elasticity of demand is less than one B) marginal revenue exceeds marginal cost
C) monopolies make profits in the short run D) marginal benefit exceeds marginal cost
Answer: D

55) Which of the following is not a possible cause of monopoly? 55) ______
A) government franchise grants B) patents
C) falling average costs D) warranties
Answer: D

56) An important difference between competitive and monopoly markets is that in a competitive 56) ______
market:
A) no gains from trade are realized while all are in a monopoly.
B) some gains from trade are realized while they are not in a monopoly.
C) some gains from trade are realized while all are in a monopoly.
D) all gains from trade are realized while they are not in a monopoly.
Answer: D

57) All of the following are sources of monopoly except: 57) ______
A) franchises and patents B) resource access or scale economies
C) economic profit D) good management
Answer: C

58) A franchise monopoly arises when a: 58) ______

A) firm's production is more efficient than two or more firms.
B) government grants the exclusive right to do business in a market.
C) government grants a patent for a new product.
D) firm has exclusive ownership of an input.
Answer: B

59) A monopolist is a natural monopolist if a potential entrant faces: 59) ______

A) decreasing returns to scale over a significant range of output.
B) AC above the residual demand curve.
 C) an inelastic residual demand schedule.
D) a higher AC curve than the monopolist.
Answer: B

60) Natural monopolies are: 60) ______

A) facing a perfectly inelastic demand curve.
B) characterized by a downward-sloping TC function.
C) protected by legal barriers to entry.
D) characterized by declining AC over significant output ranges.
Answer: D

61) A market structure characterized by monopoly is one in which: 61) ______

A) a monopolist manages its affairs in such a way that entry is deterred.
B) a monopolist manages to operate at the efficient scale of production.
C) a monopolist operates in a complacent fashion.
D) a monopolist maximizes profits by producing where MR = MC.
Answer: A

62) When no other firm will enter the market when a monopolist produces the standard profit 62) ______
maximizing output, the monopoly is:
A) a duopoly. B) an anti-competitive monopoly.
C) a natural monopoly. D) an only monopoly.
Answer: C

63) The profit-maximizing monopolist that faces a horizontal TC curve will: 63) ______
A) shut down and move to his best alternative employment.
B) produce that level of output at which MR is equal to zero.
C) produce at the level of output where demand equals supply.
D) charge a price equal to MC and satisfy all market demand.
Answer: B

64) In deciding whether to enter a market, a potential entrant takes the output of existing firms as 64) ______
given. This is known as
A) the Hicksian effect B) the Sylos postulate
C) the Coase theorem D) the Slutsky effect
Answer: C

65) A problem with average cost regulation of monopoly is that: 65) ______
A) firms stops maximizing profits. B) regulators are overwhelmed by
pressure.
C) firms become less capital intensive. D) firms cease to minimize costs.
Answer: D

66) For a firm to be a natural monopoly, a potential entrant's revenues are: 66) ______
A) lower than its total costs. B) higher than its fixed costs.
C) lower than its fixed costs. D) higher than its total costs.
Answer: A

67) Which of the following acts as a barrier for natural monopolist? 67) ______
A) possession of a patent B) a government license
C) increasing returns to scale D) ownership of a key resource
Answer: C
68) Which of the following is not a way to regulate a natural monopoly? 68) ______
A) rate of return pricing B) scale pricing
C) ATC pricing D) 2-tier pricing
Answer: D

69) Which of the following is an efficient regulatory mechanism for a monopolistic industry? 69) ______
A) average-cost pricing
B) rate of return regulation
C) distributing supranormal profits to consumers
D) a regulatory mechanism which makes MR coincide with market demand
Answer: D

70) A regulatory agency can prevent a natural monopoly from earning supranormal profits by 70) ______
forcing it to operate:
A) at the minimum of the AC function.
B) within the inelastic portion of the market demand curve.
C) where p = MC.
D) where p = AC.
Answer: D

71) Average-cost pricing is inefficient for monopolists because it: 71) ______
A) provides an incentive to minimize costs of production.
B) may induce production where price is not equal to MC.
C) requires that all consumers pay the same price.
D) does not allow a fair rate of return.
Answer: B

72) Average cost pricing is an inefficient regulatory mechanism because: 72) ______
A) if AC equals MC, price is too high or too low.
B) if AC does not equal MC, output is too large or too small.
C) if AC equals MC, output is too large or too small.
D) if AC does not equal MC, price is too high or too low.
Answer: B

73) Rate-of-return regulation is inefficient because it induces the monopolist to: 73) ______
A) produce less output than it would in the absence of the regulation.
B) use input bundles that are too capital intensive.
C) produce more output but also charge a higher price.
D) use input bundles that are too labour intensive.
Answer: B

74) Rate of return regulations encourage monopolists to use: 74) ______

A) too much capital and too little labour. B) too little capital and too much labour.
C) too much capital and too much labour. D) too little capital and too little labour.
Answer: A

75) A monopolist has no incentive to minimize its costs of production when: 75) ______
A) it is unregulated.
B) the regulatory agency imposes MC pricing.
C) a regulatory agency imposes an efficient regulatory mechanism.
D) the regulatory agency imposes rate-of-return regulation.
 Answer: D

76) Patents: 76) ______

A) lead to too much output produced.
B) encourage innovation and competitive pricing.
C) discourage innovation.
D) are meant to encourage innovation.
Answer: D

77) A monopolist faces a demand function given by Q = 50 −P and has a cost function 77) ______
C =3Q2+ 10Q + 50. If the government imposes a lump sum tax of $50, the monopoly price is:
A) $3. B) $100. C) $10. D) $5.
Answer: D

78) A monopolist faces a demand function given by Q = 50 −P and has a cost function C =3Q2+ 10Q + 78) ______
50. If the government imposes a lump sum tax of $50, the monopoly profit is:
A) $150. B) $0. C) $50. D) $100.
Answer: B

79) If a tax imposed on a monopolist causes marginal costs to increase then the consumer price: 79) ______
A) will always rise by less than the tax
B) will rise by less than the tax if demand is inelastic
C) will rise by more than the tax if demand is inelastic
D) will always rise by more than the tax
Answer: D

80) A monopolist faces a demand function given by Q = 50 −P and has a cost function C =3Q2+ 10Q + 80) ______
50. If the government imposes a lump sum tax of $50, the monopoly price is now greater than
the pre-tax monopoly price.
A) $10. B) $3. C) $5. D) $0.
Answer: D

81) A monopolist faces a demand function given by Q = 50 −P and has a cost function C =3Q2+ 10Q + 81) ______
100. If the government imposes a lump sum tax of $100, the monopoly will:
A) cease production. B) not modify its output.
C) decrease its output. D) increase its price.
Answer: A

82) Which of the following is true at the output level where P=MC? 82) ______
A) The monopolist is not maximizing profit and and should decrease output.
B) The monopolist is not maximizing profit and and should increase output.
C) The monopolist is earning a positive profit.
D) The monopolist is maximizing profit.
Answer: A

83) When a per unit tax is imposed on the sale of a product of a monopolist, the resulting price 83) ______
increase will:
A) always be less than if a similar tax were imposed on firms in a competitive model.
B) not always be less than the tax.
C) always be less than the tax.
D) always be more than the tax.
Answer: B
 84) A monopolist has set the level of output to maximize profit. The firm's marginal revenue is $20 84) ______
and the price elasticity of demand is -2.0. The firm's profit maximizing price is approximately:
A) $40. B) $20. C) $0. D) $10.
Answer: A

SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question.
85) If the government sets a price ceiling below the monopoly price, will this reduce 85) _____________
deadweight loss in a monopolized market?
Answer: Yes, as long as the price ceiling is not set too low. The price ceiling becomes the
monopolist's marginal revenue (up to the quantity demanded at that price, at
least). Since the monopolist's new marginal revenue curve is below the old one,
the firm's MC will intersect MR at a higher level of output and the monopolist will
produce a level of output closer to the socially optimal level of output, thereby
reducing the deadweight loss.

86) True/False. A profit maximizing monopolist will always produce an output that is less 86) _____________
than the output that maximizes sales revenue.
Answer: True unless MC = 0. Sales are maximized when MR(y1) = 0 (Note that this is not
the point where p = MC) and profits are maximized when MR(y2) = MC(y2). y2
and y1 are the same only when MC is equal to zero.

87) What is the effect of a lump sum tax on a monopolist? 87) _____________
Answer: If the firm's profits are larger than the amount of the lump sum tax, there will be
no effect as a lump sum tax is like a fixed cost and does affect the firm's marginal
costs or marginal revenues. If the firm is earning less than the amount of the tax in
profits, the tax will result in the firm making a loss. The firm will not change
output or price in the short run; but it will exit the industry in the long run.

88) Under what condition the monopolist be willing to sell their patent? 88) _____________
Answer: Possession of the patent prevent entry of other firms and is a source of monopoly
profits. a monopolist would be willing to sell their patent for the present value of
the expected future monopoly profits.

89) Under what condition would a potential entrant be able to purchase a patent of a 89) _____________
monopolist?
Answer: An existing monopolist would only sell their patent if the price exceeded the
present value of expected monopoly profits. A new entrant would require lower
average costs in order to receive monopoly profits in excess of the purchase price
of the patent.

90) As the result of a patent, only one company produces the drug Zoloft. This company 90) _____________
was accused of abusing its market power: using its position as the sole producer of the
drug to act as a monopolist and charge very high prices. A Competition Bureau
economist estimates that the price elasticity of demand for Zoloft at its current price is
-0.5. Does this evidence support or contradict the contention that the firm is a
profit-maximizing monopoly? Why or why not?
Answer: We know that a profit-maximizing monopolist will never price/produce in the
inelastic portion of its (market) demand curve, since to do so would mean that the
firm would be earning negative revenues on its marginal output; (MR<0). Yet, in
this case, the drug company is found to be pricing in the inelastic portion of
demand, since elasticity is measured to be -0.5 (recall elasticity between -1 and 0 is
inelastic.) though the firm is a monopoly, it is not a profit-maximizing monopoly, and the
Therefore, even allegations of abuse of market power are not consistent with the evidence.

91) Can the government find a price at which to regulate a natural monopoly that is lower 91) _____________
than the monopolist's price but generates the same profit?
Answer: No. At any price below the monopolist's price, MR < MC implying that the
increase in revenues from the last unit produced was less than the increase in
costs. At any price above the monopoly price, MR > MC implying that if the firm
could increase its output (i.e., lower its price), it would increase its revenues more
than it would increase its costs, thereby resulting in an increase in profits.

92) True/False. If an unregulated monopolistic firm is making zero profit, then it must be 92) _____________
true that price equals minimum average total cost.
Answer: False. When the monopoly price is equal to the average cost , the profit is indeed
zero but this doesn't have to be minimum AC.

93) How does imposing a tax on profits affect the monopoly optimum and the welfare of 93) _____________
consumers, the monopoly and society?
Answer: A tax on profits does not change the quantity nor the price chosen by the
monopolist since profit after tax = (1 -t) * profit before tax = (1 - t)*(revenue - costs),
where t is the tax rate on the profits. Well, this tax will not change the quantity
chosen by the monopolist (Why?) and as a consequence will not change the price.
We have the same surplus and the same deadweight loss as without a tax on
profits. The difference is that part of the producer surplus now goes to the
government in the form of taxes.

ESSAY. Write your answer in the space provided or on a separate sheet of paper.
94) A monopolist with TC = 3q2 + q + 12 faces a demand curve of P = 81 - 2q.
i) Find the monopoly price and quantity.
ii) Find CS and DWL.
iii) Find the elasticity of the demand at the monopoly equilibrium.
Answer: i) MC = 6q + 1 and MR = 81 - 4q. Set MC = MR and you get 10q = 80 or q = 8. P is found by plugging q
into the demand curve: p = 81 - 2(8) = 65.
ii) CS = 64; DWL = 16.
iii) E = - 65/16.

95) The market demand for peanuts is given by p = 50 - 0.5y. Squirell Inc. is the only supplier of peanuts. Its total
cost function is given by TC(y) = 10y. Calculate:
i) the profit maximizing level of output, the profit maximizing price, the consumers surplus, the monopoly
profits, the burden of monopoly (deadweight
loss)
ii) Squirell Inc. loses a legal battle and as a result has to pay licensing fee of $700 per
year to Jiffy Ltd. Its total costs therefore increase to TC = 10y + 700. With this new cost function, once again
calculate: the profit maximizing level of output, the profit maximizing price, the consumers surplus, the
monopoly profits, the deadweight loss.
iii) Are your answers the same as in part (a) or different? Explain why.
Answer: i) y = 40, p = 30, CS = 400, Profit = 800, DWL = 400;
ii) y = 40, p = 30, CS = 400, Profit = 100, DWL = 400;
iii) they are the same. A lump sum tax reduces profit but does not influence the profit maximizing
price and quantity.

96) Consider a monopoly with inverse demand function p = 24 - y and cost function c(y) = 5y2 + 4:
i) Find and calculate the monopolist's profits.
the profit ii) Now consider the case in which the monopolist has now another plant with the cost structure c2(y2) =
maximizi 10y2. How much will the monopolist produce in each plant, what is the price, and the total profits of the
ng monopoly?
output iii) Now suppose there is a technological change in the first plant and it has the following cost function: c1
and
(y1) = 2y1. How much will the monopolist produce in each plant and what is the price?
price,
Answer: i) p = 22; y = 2; profit = 20;
ii) y1 = 1; y2 = 6; p=17; profit = 50;
iii) (y1; y2) = (11; 0) and p = 13.

97) A monopoly publisher either pays an author

i) a royalty of x percentage of the revenues from the book, or
ii) a lump-sum amount of L dollars.
Show how the compensation scheme affects the price the publisher sets and the number of books that the
publisher sells.
Answer: i) The publisher's objective is to maximize profits. Let Profit(Q) denote profits when the monopolist
produces Q. The monopolist maximizes Profit(Q) = P(Q)*Q - C(Q), where C(Q) is the cost function.
Under scheme (i), the monopolist maximizes Profit(Q) = (1 - x)P(Q)*Q - C(Q).
If demand is linear, P(Q) = a - bQ, then (1 -x)P(Q)*Q = (1 - x)a - (1 - x)bQ. So it is 'as if' the monopolist
faces a new (inverse) demand curve which has a lower P-intercept and the same Q-intercept. The
marginal revenue MR(Q) = a - 2bQ will change in the same manner. That is, MR'(Q) = (1 -x)a - (1 -x)2bQ.
Since marginal cost has not changed, quantity and price will change under this scheme.
Note that the publisher receives (1 - x)pt for each unit sold and consumers pay pt > p* in the new
equilibrium. The number of books sold in the new equilibrium is Qt < Q*.
Under scheme (ii), the monopolist maximizes Profit(Q) = P(Q)Q - C(Q) - L. The marginal revenue and
marginal cost are NOT affected by a lump-sum tax. Hence there is no change in the (p*,Q*) with a
lump-sum tax. The only thing that will be affected under the lump-sum scheme is the publisher's
profit.

98) Consider a monopoly with inverse demand function p = 90 - 10y and cost function c (y) = 10y.
i) Find the profit maximizing output and price, and calculate the monopolist's profits.
ii) Now, suppose the government imposes a per unit tax t = 20. Find the new price, output and profits.
Answer: i) y = 4, p = 50, profit = 160.
ii) y = 3, p = 60, profit = 90.

99) A monopolist firm faces the following cost curve: C(Q) = Q2 + 12, where Q is the output produced. The
demand for its product is given by P = 24 - Q.
i) Find the equilibrium price and quantity.
ii) Find the profit level.
iii) Calculate the Consumer Surplus, the Producer Surplus and the Deadweight Loss associated to the
monopoly.
Answer: i) MR = MC, so Q = 6. Now plug this Q in the demand curve to get P = $18.
ii) profit = $60.
iii) CS = $18, PS = $72, DWL = $6. (The best way to figure out these values is to draw a graph.)

100) A monopolist firm faces the following cost curve: C(y) = Q2 + 12, where Q is the output produced. The
demand for its product is given by P = 24 - Q.
a) Derive the MR for this firm.
b) Find the equilibrium price and quantity.
c) Find the profit level.
d) Surplus, the Producer Surplus and the Deadweight Loss associated with monopoly pricing.
Calculate e) How does charging the monopolist a specific tax of $8 per unit affect the monopoly optimum and the
the welfare of consumers, the monopoly and society (where society's welfare, or surplus, includes the tax
Consum revenue)? What is the incidence of the tax on consumers?
er
Answer: a) MR = 24 - 2Q.
b) Q = 6, P = $18.
c) profit = $60.
d) CS = $18; PS = $72; DWL = 2*6/2 = $6
e) The tax here will affect the MC and then the quantity produced and the price charged.
Q = 4 and P = $20. The tax will reduce the CS and PS and will produce tax revenue to the government
of $32. Finally, the DWL will increase as we move further from the “competitive” equilibrium. Also,
the consumer will pay only part of the tax. Notice that the new price is $20. And the price before tax
was $18. So, consumers only pay 2/8 of the tax. The monopolist pays the rest.3
 1) B
2) D
3) C
4) B
5) A
6) B
7) B
8) C
9) D
10) C
11) B
12) D
13) A
14) B
15) A
16) A
17) B
18) C
19) B
20) C
21) A
22) C
23) D
24) D
25) C
26) C
27) A
28) C
29) A
30) A
31) C
32) C
33) D
34) C
35) B
36) D
37) B
38) D
39) B
40) D
41) D
42) D
43) D
44) A
45) D
46) B
47) B
48) B
49) A
50) B
51) D
52) C
53) A
54) D
55) D
56) D
57) C
58) B
59) B
60) D
61) A
62) C
63) B
64) C
65) D
66) A
67) C
68) D
69) D
70) D
71) B
72) B
73) B
74) A
75) D
76) D
77) D
78) B
79) D
80) D
81) A
82) A
83) B
84) A
85) Yes, as long as the price ceiling is not set too low. The price ceiling becomes the monopolist's marginal revenue (up
to the quantity demanded at that price, at least). Since the monopolist's new marginal revenue curve is below the
old one, the firm's MC will intersect MR at a higher level of output and the monopolist will produce a level of
output closer to the socially optimal level of output, thereby reducing the deadweight loss.
86) True unless MC = 0. Sales are maximized when MR(y1) = 0 (Note that this is not the point where p = MC) and profits
are maximized when MR(y2) = MC(y2). y2 and y1 are the same only when MC is equal to zero.
87) If the firm's profits are larger than the amount of the lump sum tax, there will be no effect as a lump sum tax is like
a fixed cost and does affect the firm's marginal costs or marginal revenues. If the firm is earning less than the
amount of the tax in profits, the tax will result in the firm making a loss. The firm will not change output or price in
the short run; but it will exit the industry in the long run.
88) Possession of the patent prevent entry of other firms and is a source of monopoly profits. a monopolist would be
willing to sell their patent for the present value of the expected future monopoly profits.
89) An existing monopolist would only sell their patent if the price exceeded the present value of expected monopoly
profits. A new entrant would require lower average costs in order to receive monopoly profits in excess of the
purchase price of the patent.
90) We know that a profit-maximizing monopolist will never price/produce in the inelastic portion of its (market)
demand curve, since to do so would mean that the firm would be earning negative revenues on its marginal output;
(MR<0). Yet, in this case, the drug company is found to be pricing in the inelastic portion of demand, since elasticity
is measured to be -0.5 (recall elasticity between -1 and 0 is inelastic.) Therefore, even though the firm is a monopoly,
it is profit-maximizing monopoly, and the allegations of abuse of market power are not consistent with the evidence.
not a
91) No. At any price below the monopolist's price, MR < MC implying that the increase in revenues from the last unit
produced was less than the increase in costs. At any price above the monopoly price, MR > MC implying that if the
firm could increase its output (i.e., lower its price), it would increase its revenues more than it would increase its
costs, thereby resulting in an increase in profits.
92) False. When the monopoly price is equal to the average cost , the profit is indeed zero but this doesn't have to be
minimum AC.
93) A tax on profits does not change the quantity nor the price chosen by the monopolist since profit after tax = (1 -t) *
profit before tax = (1 - t)*(revenue - costs), where t is the tax rate on the profits. Well, this tax will not change the
quantity chosen by the monopolist (Why?) and as a consequence will not change the price. We have the same
surplus and the same deadweight loss as without a tax on profits. The difference is that part of the producer surplus
now goes to the government in the form of taxes.
94) i) MC = 6q + 1 and MR = 81 - 4q. Set MC = MR and you get 10q = 80 or q = 8. P is found by plugging q into the
demand curve: p = 81 - 2(8) = 65.
ii) CS = 64; DWL = 16.
iii) E = - 65/16.
95) i) y = 40, p = 30, CS = 400, Profit = 800, DWL = 400;
ii) y = 40, p = 30, CS = 400, Profit = 100, DWL = 400;
iii) they are the same. A lump sum tax reduces profit but does not influence the profit maximizing price and
quantity.
96) i) p = 22; y = 2; profit = 20;
ii) y1 = 1; y2 = 6; p=17; profit = 50;
iii) (y1; y2) = (11; 0) and p = 13.
97) i) The publisher's objective is to maximize profits. Let Profit(Q) denote profits when the monopolist produces Q.
The monopolist maximizes Profit(Q) = P(Q)*Q - C(Q), where C(Q) is the cost function.
Under scheme (i), the monopolist maximizes Profit(Q) = (1 - x)P(Q)*Q - C(Q).
If demand is linear, P(Q) = a - bQ, then (1 -x)P(Q)*Q = (1 - x)a - (1 - x)bQ. So it is 'as if' the monopolist faces a new
(inverse) demand curve which has a lower P-intercept and the same Q-intercept. The marginal revenue MR(Q) = a -
2bQ will change in the same manner. That is, MR'(Q) = (1 -x)a - (1 -x)2bQ. Since marginal cost has not changed,
quantity and price will change under this scheme.
Note that the publisher receives (1 - x)pt for each unit sold and consumers pay pt > p* in the new equilibrium. The
number of books sold in the new equilibrium is Qt < Q*.
Under scheme (ii), the monopolist maximizes Profit(Q) = P(Q)Q - C(Q) - L. The marginal revenue and marginal cost
are NOT affected by a lump-sum tax. Hence there is no change in the (p*,Q*) with a lump-sum tax. The only thing
that will be affected under the lump-sum scheme is the publisher's profit.
98) i) y = 4, p = 50, profit = 160.
ii) y = 3, p = 60, profit = 90.
99) i) MR = MC, so Q = 6. Now plug this Q in the demand curve to get P = $18.
ii) profit = $60.
iii) CS = $18, PS = $72, DWL = $6. (The best way to figure out these values is to draw a graph.)
100) a) MR = 24 - 2Q.
b) Q = 6, P = $18.
c) profit = $60.
d) CS = $18; PS = $72; DWL = 2*6/2 = $6
e) The tax here will affect the MC and then the quantity produced and the price charged.
Q = 4 and P = $20. The tax will reduce the CS and PS and will produce tax revenue to the government of $32.
Finally, the DWL will increase as we move further from the “competitive” equilibrium. Also, the consumer will pay
only part of the tax. Notice that the new price is $20. And the price before tax was $18. So, consumers only pay 2/8
of the tax. The monopolist pays the rest.3
Another random document with
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 A long cliff runs from Bu Mungar to Dakhla Oasis, the road
between the two lying at its foot.
The sand dunes that form a long north and south belt to the south
of the great hill—Jebel Edmondstone—that lies some fifteen miles to
the west of Qasr Dakhl, gave us considerable trouble, not only on
account of their height, but because of their extreme softness. The
camels sank into them in places literally up to their hocks.
In the softest parts the caravan absolutely came to a standstill,
being quite unable to make any progress without assistance. I had to
put one man on either side of each camel, and make them take the
weight of the loads on their backs, and lift them up with every step
that the camels gave, in order to get them along at all. Then having
got a beast through the soft places, I had to fetch the others across,
one by one, in the same manner. Our rate of progress consequently
fell to something like half a mile an hour.
On the evening of the fifth day after leaving Bu Mungar we arrived
in Mut, having lost some of the baggage, two men and two out of our
seven camels, and with the rest of the caravan pretty well foundered
from over-driving.
During the journey down from Bu Mungar, my own men, as I
expected, finding that, as members of the Senussia, they had to give
up smoking, gradually came round and recovered from their attack of
Senussism. So, before reaching Mut, we halted out of sight of the
town, and I put Abd er Rahman up on a camel and sent him in to find
out how the land lay in the oasis.
He returned extremely pleased with himself. He had left his camel
tied up among the dunes and had then gone into Mut “like a thief,” as
he expressed it, so that no one should see him and had gone to the
house of a friend of his, who told him that some Tibbus had been
several times into Mut, but had not been seen there recently. They
had gone back to the zawia at Qasr Dakhl. Here, as I afterwards
heard, they were seen and photographed by a native who happened
to have come into the oasis from the Nile Valley. His friend thought it
would be quite safe for us to come into the oasis, as when once we
had been seen there, the Senussi would not dare to molest us. So
we packed up our traps again and started.
On reaching Mut, I again put up in the old store. Having seen my
baggage safely deposited there, I went round to the post office to get
my mail.
I found Sheykh Senussi—the poetical clerk of the qadi—had
managed to get his son appointed as postmaster in the oasis, a
position that must have been of considerable use to the Senussi, on
account of the thinness of the envelopes used by the natives.
Though office hours, so far as they can be said to exist in Dakhla,
were long over, the door of the office itself was open, and I entered
without being heard. I found the intelligence department of the
Senussi in the oasis, consisting of Sheykh Senussi and his son, hard
at work examining the mails. They held each letter up in turn to the
light, and, if the contents were of interest, read them through the
envelope. A letter lying on the top of a basin of hot water had
presumably been undecipherable in this way, and so the flap of the
envelope had to be steamed open. A stick of wax and a bottle of
gum, lying on the counter, seemed to indicate that sometimes they
experienced some difficulty in reclosing the correspondence after it
had been read.
I walked quietly away from the door, and then returned clearing
my throat loudly and making as much noise as I could and asked for
my mail. Sheykh Senussi welcomed me most cordially. The basin of
water, the gum and the sealing wax had all disappeared. The
postmaster was busily engaged in sorting the letters. But I fancy that
I had just seen one of the many ways in which information gets
known in Egypt!
Affairs in Mut I found to be in a very queer state. A new mamur
had arrived on the scene, who, according to reports, both drank and
took hashish to such an extent that he had gone practically mad. He
had quarrelled so violently with the police officer, his understudy, that
one day he had fired three revolver shots at him, from a window in
his house, as he crossed the square by the mosque. I was shown
the places where the bullets had ploughed up the ground, so
something of the sort had probably happened.
The mamur, after this exhibition, shut himself up in his house and
never went out even to the merkaz, and declined to see anyone. The
policeman was doing his feeble best to keep things going; but as he
was afraid to go to the merkaz, which lay close to the mamur’s
house, for fear that he should be shot at again, he was somewhat
handicapped in his work.
I passed once through the mosque square and caught a glimpse
of the mamur peeping at me through the crack by the hinge of his
half-opened door, but this was the only view I had of him.
He sent me, however, a roundabout message to the effect that he
had seen me pass his house and he considered it an ayb that I had
not called on him as he was the head of the Government in the
oasis, and a much more important person than I was myself. He
added that he expected me to do so at once. As my views as to our
relative importance differed from his, I continued to ayb him in the
same way till I left the oasis.
The day after our arrival, Qwaytin asked permission to go for the
day to the village of Hindau. There was, I knew, a small Senussi
zawia there, but it would have been useless for me to refuse him
permission, so long as he was at liberty, and with the existing state
of affairs in the oasis it was quite out of the question to try and get
him arrested. So I thought it best to pretend I did not see what he
was driving at and allowed him to go.
Later in the day I was in my room in the upper floor of the store
when, rather to my surprise, I heard Qwaytin’s voice in the court
below talking to Dahab and Abd er Rahman. As I had not expected
him back so soon, I suspected that he was up to some mischief, so
had no hesitation at all in listening to the conversation, especially as
I wished to know more exactly the terms on which he stood with my
men.
They were immediately below my window; but Qwaytin was
speaking in such a low voice that I could only catch a word here and
there of what he was saying. But I caught enough of the
conversation to become greatly interested.
He was apparently giving them instructions from a certain Sheykh
Ahmed, whose identity I was unable to ascertain. Repeatedly I heard
him mention a certain kafir (infidel) and once a “dog,” of whose
identity I entertained no doubt at all—listeners proverbially hear no
good of themselves. Several times I heard him state “Sheykh Ahmed
says—” something that was quite inaudible, followed by
expostulations from Dahab and Abd er Rahman, and then again they
were told that “Sheykh Ahmed says—” something else that the kafir
would have given a good deal to have heard.
Eventually, I heard Qwaytin take himself off, and, shortly
afterwards, Dahab, looking terribly scared, came into the room,
announcing that Dakhla was a very bad place indeed, and that we
must get out of it as quickly as possible.
Abd er Rahman next burst unceremoniously in and asked abruptly
when I intended to start. I told him I meant to get off as soon as I
possibly could. He looked immensely relieved, and said that the
sooner we started the better.
I tried to find out from them exactly what was in the wind, but
native-like I could not get them to be in the least explicit.
I went out and interviewed Qwaytin and told him I intended to start
the next day. He grinned and refused absolutely to let me have the
camels. I felt inclined to take them, but a large trading caravan with
several bedawin had come in during the day, and these men all hung
round listening to our conversation in what seemed to be anything
but a friendly frame of mind, and I thought it best not to make the
attempt. I sounded one or two of the traders with a view to hiring
their camels, but met with a surly refusal. I might, of course, have
tried to get the Government authorities in the oasis to force Qwaytin
to fulfil his arrangement with me; but it does not do, in a case of this
sort, for a white man to appeal to a native official for assistance, so I
had to look round for some other means of continuing our journey.
 After some difficulty, I succeeded in hiring three other camels that
were in the oasis. Then, having arranged to leave part of my
baggage, for which I had no immediate use, in safe keeping in Mut
till I could send for it, I prepared to start on the following morning.
I told Abd er Rahman to send his friend out into the village to
gather information as to the Senussia. During our visits to Mut, this
man on several occasions made himself considerably useful to us;
but fearing to appear openly as being favourable to us, he always
conducted his operations in a clandestine manner.
Abd er Rahman, who was always in his element in anything in the
nature of an intrigue, introduced him secretly into the store in the
middle of the night, and brought him up to my room. His information
was entirely satisfactory. I was unable to get out of him exactly what
scheme the Senussi had devised for our benefit, but he declared that
our intention to make an early departure had entirely checkmated
them, and that they were furiously angry in consequence.
But the Mawhubs, he said, were extremely cunning, and as we
had now got the better of them, their one desire was that the whole
episode should be forgotten and that they should now appear as our
best friends. He said that, if we got away quickly, we had nothing to
fear from them; but he emphasised the importance of not wasting
any time. I sent him off with a thumping bakhshish.
 CHAPTER XXV

T HE police officer and the Government doctor—a Moslem this

time—insisted on accompanying me across the oasis. They told
me they had sent a messenger to Tenida to say that we intended to
stay the night there, so as to give the ’omda time to prepare for us.
My little caravan of three camels and three men seemed
extremely small after the one we had been accustomed to; but the
men were in good spirits at the prospect of soon returning to their
homes, and the camels were good ones and stepped out well.
As we left Smint, Sheykh Senussi, the poet from Mut, in a most
excited state, rushed past us, waving his arms wildly in the air and
called out to the policeman something that I could not catch.
On reaching Tenida we went to the ’omda’s house, lying a mile or
two to the north of the town, where we drank the usual tea.
Afterwards our host invited us to come and sit in his garden.
It was a large place covering several acres, enclosed by a wall
and planted with a variety of palms and fruit trees, all looking
extremely healthy. Judging from the size of the trees, they could not
have been planted more than twenty years. There was a plentiful
supply of water, as a small stream coming from a well, the Bir
Mansura ’Abdulla, ran through the plantation with a babbling sound
that was very grateful after our hot ride across the oasis. Altogether
the garden was a delightfully shady place.
The ’omda led the way, directing my attention to the different kinds
of trees we passed. Behind came a crowd of officials and the leading
men of the district, laughing and chaffing each other in the usual
noisy manner of Egyptians. Finding a smooth level place under a
palm, with the stream running close beside it, I suggested that we
might sit down there; but the ’omda declared that the best place was
a little farther on, just beyond a thicket in front of us, and made way
for me on the path to go in front.
The other natives suddenly all stopped talking and followed us in
a most unnatural silence. I led the way, turned round the thicket—
and found myself face to face with old Sheykh Mawhub!
He was sitting on a rug in the shade of a small fig tree, apparently
engaged in pious meditation. It was an idyllic scene, to which a
pergola covered with vines and roses that stood behind him made an
effective background.
He was apparently prepared for a journey, his baggage consisting
of a small sack containing only a few clothes showed that his wants
were easily satisfied. A jug of water and a handful of dates, left over
from his meal, showed that he had been demonstrating to the
luxurious fellahin of the oasis, the simple life that the Senussia lived
in their zawia—with the help of a Turkish cook.
The situation was perfectly clear. The little ramp of the Senussia
having missed fire, they were desperately anxious that it should be
overlooked. So the natives of the oasis, with their usual kindly
instincts, had arranged this meeting in order to “make the peace.” I
was quite willing to fall in with their views—there was no use in
raising the Senussi question.
Old Mawhub greeted me with a benevolent smile, that was almost
fatherly in its friendliness. He patted the rug beside him, as an
invitation to sit down, and we entered into conversation.
He expressed himself delighted to see me; but I noticed that he
omitted the formality usually made to one returning from a journey,
and did not praise Allah for my safety. He made no reference at all to
my having been in the desert, beyond saying that his son, Sheykh
Ahmed, was very angry, very angry indeed, that I had passed so
close to his ezba without partaking of his hospitality. I felt quite sure
of his anger, but I rather doubted the cause of it.
Mawhub explained that he was on his way to Cairo to “sell some
horses” he had with him. The fact that one of his rare visits to the
Nile Valley happened once more to coincide with my return to
civilisation after a bother in the Senussi country, was not one that I
overlooked. I concluded that he would break his journey to Cairo at
Assiut, so as to see Qwaytin through any complications that might
arise in the mudiria—he did.
After ten minutes’ conversation, during which we both carefully
avoided dangerous topics, his youngest son, ’Abd el Wahad, who
was travelling with him, acting as a most attentive and devoted
servant, intimated to me, in a whisper, that his father was tired, and
as he was an old man and had a long journey before him on the
morrow, wanted to sleep. So I took leave of him and we returned to
the ’omda’s house, where a meal was served, after which I rode
back to the camp for the night.
Shortly after dawn the next day, Mawhub’s caravan—a most
wretched-looking collection, consisting of a couple of camels and a
miserable horse, passed our camp in charge of two dejected-looking
blacks. A few minutes afterwards old Mawhub himself rode up with
his son, mounted on two sorry looking screws, that were apparently
the horses he was taking into Cairo for sale.
They dismounted on reaching the camp, and the old sheykh
suggested, as we were both of us travelling to Kharga, that we
should join forces and make the journey together. He was an
interesting old fellow, and I felt rather tempted to do so. But though I
was ready to let bygones be bygones to a certain extent, I was not
prepared to go to this length, so finding that he was intending to
travel by the lower or Gubary road, I decided to take the route across
the plateau via ’Ain Amur. Mawhub, apparently much disappointed,
jumped up again in his saddle with a nimbleness surprising in a man
of his age, and rode off wishing me most cordially tarik es salaama
(safe road, i.e. journey).
We kept a careful look-out at night and took no risks during our
remaining time in the desert, but our precautions were probably quite
unnecessary. Our journey to Kharga was entirely uneventful.
Here we found great changes. The English company that had
been endeavouring to make the desert blossom like a rose, had only
succeeded in gathering the thorns. A shortage in the water supply,
leading to interference between the wells, the saline character of the
ground, the drifting sand and tearing sandstorms had proved to be
too much for them. The company was practically in liquidation. The
European staff had mostly gone and taken up work elsewhere. Only
one member of it remained, and he was busy in the final
preparations necessary before leaving the place in the charge of a
native. Finding himself thrown out of a job, he was looking round for
a new one, and was hoping to have the old office of Inspector of the
Oases revived in his favour—I found myself regarded, in
consequence, with a somewhat jaundiced eye as being a possible
rival.
He need, however, have had no anxiety on that account. One can
put in a fairly interesting time in mapping the unknown parts of the
desert, collecting weeds that no one wants, studying the natives’
habits and peculiarities, listening to their stories of buried treasure,
and enchanted cities, and in chasing will-o’-the-wisp oases round
and round the desert; but to settle down in these wretched oases for
the term of my natural life, to seeing that the native officials did not
extort more than a reasonable amount of bakhshish from the
wretched fellahin under their charge, and to settling disputes as to
oranges that fall on the wrong side of a wall, was not one that greatly
appealed to me.
The night’s rest that I got in Kharga was most welcome; there had
not been a night since leaving Qasr Farafra, a fortnight before, when
I had been able to get more than a very limited amount of sleep.
A sleeping man is so utterly defenceless that I had been put to
great shifts to get any rest at all on the five days’ journey from Bu
Mungar to Dakhla. It was not till we got to Mut that I felt I could trust
my men enough to risk being caught by them asleep. Even while
inhabiting the old store, Dahab and I took it in turns to keep watch
during the night.
I awoke the next morning feeling more alive than I had done for
some time, and in the train I continued my night’s rest at intervals
during the journey.
 On reaching Qara, the base of the railway on the edge of the Nile
Valley, the train stayed for some minutes and I got out and walked
along the platform. I found that I had been a fellow-passenger on the
train with old Sheykh Mawhub. The train was packed with natives,
but the compartment which he and his son occupied had been left
entirely to them.
They were an unobtrusive looking couple. The old man sat
huddled up in the far corner of the third-class carriage, on an old
rusty looking sheepskin with a gula (water bottle) and a handful of
dates beside him on the wooden seat. Both he and his son were
almost shabbily dressed as ordinary bedawin—his “glad rags” being
probably contained in the patched and dilapidated hurj he carried
with him. No one unacquainted with his identity would have troubled
to look at him a second time. But for all that he was a man who
probably had as much influence among the Mohammedans in Egypt
as any other native.
He was still travelling in his character of a horse dealer, and sold
one of his screws to the engineer in charge of the line for £5—it
looked a stiff price.
Shortly afterwards, Abdulla Kahal, an old thief of a carpet
merchant, living up in the native quarter of Cairo, who acted as head
sheykh of the Senussia in Egypt, was removed by them from his
office and Sheykh Mawhub was appointed in his place. If there were
any emoluments attached to the job, I have sometimes wondered if I
could not have made out a claim to some sort of commission on
them.
I stopped a few nights with a hospitable friend, on the way to
Assiut, to allow Qwaytin time to get through from Dakhla. As I slept
most of the time, I must have been a remarkably dull guest. I then
went on to Assiut to have it out with my guide.
Having arranged that matter fairly satisfactorily, I took the train for
Cairo, left the “romantic desert” to look after itself, and exchanged
the heated atmosphere of the “Arabian Nights” for the saner one of
Europe.
 · · · · · · ·

The following are the main results of my visits to the Libyan

Desert:
1. A map of practically the whole desert was compiled from
information collected from natives. This contained the names of
about seventy new places, not shown on any previous maps. It also
showed the distribution of the sand dunes and many unknown hill
features.[5]
2. The farthest point that was reached to the south-west of Dakhla
was practically the centre of the desert. This journey showed that the
pre-existing ideas of this district were entirely wrong, and that the
hundreds of thousands of square miles, shown in this part on the old
maps as being covered with gigantic dunes, were in reality
practically free from drift sand, and that the large dune-field lying to
the west of the Egyptian frontier, that Rohlfs had found such an
impassable obstruction, came to an end about a day’s march to the
south of his route, the sand being all banked up by the high
sandstone plateau that we found occupying the centre of the desert.
[6]

3. The position of Bu Mungar hattia was astronomically fixed, and

the cliff running from there to Dakhla was mapped for the first time.[7]
4. The cliff forming the eastern boundary of the Farafra
depression was mapped, thus showing that the escarpment of the
east and north of Kharga is a continuation of the cliff that runs west
from Iddaila Oasis, the whole escarpment—except for a narrow
break to the north of Farafra—is consequently continuous and runs
for some 450 miles. It forms the southern limit of the limestone
plateau, and is the main hill feature of this part of the desert.[7]
5. Two small new oases—’Ain el Agwa and ’Ain Khalif—were
found in the western portion of the Farafra depression. The site of Bu
Gerara was also discovered, and most of the isolated little plateau
that lies on its south-west was mapped.[8]
 6. A survey of the desert to the north of ’Ain Amur showed that the
plateau there was riddled with a curious network of little depressions.
[9]

7. Several months were spent in studying the sand dunes and

their method of formation.[10]
8. A considerable amount of material was collected on the
manners, customs, legends, measurements and superstitions of the
natives.[11]
9. Notes were also made upon their methods of well sinking, and
dividing the flow from the wells.[12]
10. Over 240 characters and inscriptions of the “Libyan” type were
found and copied.
11. A number of plants growing in the desert and oases were
collected and their geographical distribution worked out.[13]
12. A zoological collection, mainly of insects, was also made.
 CHAPTER XXVI

CUSTOMS, SUPERSTITIONS AND MAGIC

T HE natives of the oases in Egypt are known as the Wahatys, and

are a feeble lot as compared with the inhabitants of the Nile
Valley, with whom they seem racially to be intimately connected. This
deterioration in the race is probably due to their poverty, insufficient
food, poorer housing accommodation and to the prevalence of the
serious form of malaria known as oasis fever.
In their customs the inhabitants of the oases closely resemble the
natives of the Nile Valley; but in some respects they are peculiar.
Until the railway into Kharga was constructed, the oases were very
much more cut off from the outside world than at present.
Consequently the inhabitants are in many ways much more primitive
than the fellahin of the Nile Valley, and still follow customs which in
some cases may have been followed there, but which have long
since become obsolete. Many of their peculiarities in this respect are
probably confined to the oases, and may never have existed
elsewhere.
As an example of the primitive conditions of life in Kharga, it may
be noted that the old method of producing fire by rubbing two pieces
of wood together is still used by some of the older inhabitants,
though the introduction of matches is causing it to die out. Fire is
produced in this way by two methods. In one, a stick is held vertically
upon a block of wood and rapidly twirled between the palms of the
hands; in the other it is rubbed backwards and forwards in a groove
on the block with the action of a carpenter sharpening a chisel on a
hone. In both cases a pinch of fine sand is sometimes placed
between the two pieces of wood in order to increase the friction.
 Marriage Procession in Dakhla Oasis.
Note the clown and band in front, the bride’s friends firing guns and carrying flags,
her tea things and her wedding dress on a cross above the procession behind. She
herself wears old clothes. (p. 252)
 Vegetation in Hattia Kairowin.
This shows the neglected palms and scrub to be
seen in a Hattia, or uninhabited oasis. (p. 222).

Auguries as to the future of a child are drawn by his parents from

events that happen about the time of his birth; thus, if his father, or
any member of his family should meet with an accident, or fall ill at
that period, it is considered that he will be unlucky. If, however, some
stroke of luck should fall to his father, such, for instance, as his being
able to conclude a good bargain, it is thought to be a good omen for
the child’s future.
It is said to be unlucky to be born on a Wednesday, for this day of
the week throughout the year is considered to be an ill-omened one
in the oases—the last Wednesday of the month of Safar being
considered to be the most unlucky of all.
As soon as a son has been born, in either Dakhla or Kharga
Oases, a little ceremony takes place, which cannot be described
here, but which is intended to cause the child when he grows up to
become a very fast runner. In both these oases, a very curious
ceremony takes place on the seventh day after his birth, which is
known as “sieving the baby.” A pinch of salt and a small quantity of
each of the grains—wheat, barley and rice—grown in the oases, is
placed in a round sieve. In this sieve, too, is placed the baby. It is
then shaken, as though it were being used in the ordinary way, while
a woman close by beats as loudly as possible with a pestle on a
mortar, as though she were pounding rice.
The grain and salt that pass through the sieve are then carefully
collected and taken by the father of the child and thrown into the air
to the north, south, east and west in various places throughout his
village. The ceremony is completed by the father taking the sieve
and bowling it like a hoop along the village streets.
The effect of this quaint proceeding is said to be as follows: the
grain and salt put into the sieve with the child are supposed to
protect him against want and cause him to have plenty to eat
throughout his life. The pestle and mortar are beaten close to him to
ensure that he will not be frightened by any noise when he grows up.
The seed is thrown to the four points of the compass in his village to
act as a charm to enable him to travel in security in any direction
should he leave it. The bowling of the sieve about the streets is
another charm intended to make him a fast runner.
These elaborate precautions, taken to ensure that the child shall
be able to travel safely, and that he shall turn out a fast runner, seem
quite out of character with such an eminently unathletic and
sedentary race as the dwellers in the oases. They seem to be more
in accordance with the character of the Arabs, from whom it is
possible that these ceremonies may be derived, or perhaps they
may owe their origin to some tribe in the Sudan. This sieving
ceremony is said to be also occasionally performed in the Nile Valley.
The first cutting of a child’s hair and finger-nails is attended with
some ceremony, and takes place when it is a year old. In the case of
a boy, a tuft of hair is left long on his forehead, to remind his parents
that they should be grateful to Allah for giving them a son—a male
child being always considered of much greater value than a girl.
As it is for some reason considered to be unlucky to open a pair of
scissors before a child’s face—perhaps for fear of accidents—its
nails are always first cut with its hand behind its back; more usually,
however, they are bitten off short by its parents. The ends of the
fingers are then dipped into newly ground flour to “prevent them from
growing again.”
 If a child is regarded as being unusually handsome or well
conditioned, so that the mother fears it may incur the evil eye of
other matrons less favoured in their progeny, a black cross as a
protection is smeared on its forehead, if it is its face that is likely to
be envied; or on the back of its hand if it should be its plumpness
that it is feared will cause heart burnings. This custom is most
probably derived from the Copts.
The fear of the evil eye is widely distributed, especially in the
East, and in the oases many precautions are taken to guard against
it. To ensure a good crop on a palm, for instance, an animal’s bone—
frequently a skull—or a piece of manure, wrapped up in a cloth, is
hung in its branches, and sometimes small doll-like figures are used
in the same way. Charms, in the form of texts, or cabalistic signs,
written either by a religious sheykh, or by certain men who are
supposed to have a special gift in this direction, are sometimes done
up in a little packet, made generally of leather, and hung round the
neck of a child or valuable beast as a protection from the evil eye;
but they are not very much in request.
They have also a charm that they recite before lying down to
sleep, or sitting down in a place they suspect to be infested with
scorpions or other poisonous creatures. Having recited it they spit to
the north, south, east and west, and then consider themselves to be
safe from attack. I attempted to get a copy of the spell that was given
to me translated, but was unable to find anyone who could do so. It
appears to be merely gibberish.
Boys in the oases are usually circumcised between the ages of
three to five years—the parents, if poor, wait till they have saved
enough to make the necessary feast; they also, if possible,
endeavour to make the circumcision coincide with a marriage in their
village, in order that expense may be saved to both parties by
combining the marriage and circumcision processions. The richer
families for the circumcision feast will kill a sheep, or even a cow, but
with the poorer classes a very much simpler meal suffices.
Girls are married at an extremely early age—sometimes when
only eight years old. But in these cases the wife probably merely
acts at first as an attendant upon her husband. When between
twelve or fourteen years old, however, they begin to have children,
ceasing to do so between forty and forty-five.
Divorce is extremely common. I was shown a young girl in
Dakhla, whose age I was told was only twelve—she did not look to
be more—who had already been divorced three times. The state of
morality in these oases is very low indeed, and this, combined with
the very early marriages, probably has a good deal to say to the
feeble character of the inhabitants.
Marriages are celebrated with great pomp—especially in the case
of the richer inhabitants—and their ceremonies differ in some
noticeable points from those in the Nile Valley.
Mahr, or dowry, is paid by the man to the bride’s family in all but
the case of the very poor. This preliminary having been settled, the
ceremony of the katb el kitab, or “writing of the writ,” is gone through,
though, as in the case of the Nile Valley, it is seldom that any written
contract of marriage is drawn up. The bridegroom, accompanied by
a friend or two, goes to the house of his intended bride, where he
meets her representative, to whom he pays over the portion of the
dowry agreed upon. Everyone recites the fatha, or first chapter of the
Koran—from which proceeding the ceremony is often alluded to as
the “saying of the fatha”—and then the bridegroom and the
representative of the bride squat facing each other on the ground,
and, prompted usually by a religious sheykh, take hold of each
other’s hand and swear the marriage contract.
About a week later, the Zeffet el Arusa, the procession of the bride
to the bridegroom’s house, takes place shortly after noon. A
procession of this kind that I saw in Dakhla Oasis, was headed by a
sutary, or jester, who had tied the end of the long leaf of a palm to
his waist in front and then passed the other end through his legs and
up his back, so that it had very much the appearance of a bushy tail.
He carried a staff in each hand, and hopped about on these in a
most grotesque manner.
Behind him followed a man beating a drum of the kind known in
Egypt as the tabl beladi, beside him walked a blind man clashing
cymbals (kas). Then followed a crowd of the friends and relations of
the bride.
The bride herself, unlike those of the Nile Valley, does not wear
her wedding dress. This is borne behind her, held above the heads
of the procession so that all can see it, by being supported on a
couple of sticks lashed together to form a cross. She herself wears
an ordinary robe, and a shawl, usually red or of a bright colour, on
her head.
The gala dress worn by the women of these oases differs
somewhat from that usually worn by the women of Egypt. It is
generally either black or of a very dark blue, and is worked on the
front in coloured wools—usually red and yellow—in a sort of
“herring-bone” pattern. The richer women usually cover a great part
of the front of their dress, down to rather below the waist, with
silvered sequins sewn closely together on to the material of which
the dress is composed, producing an effect much resembling old
scale mail.
Their hair usually hangs down their backs in three or four long
plaits, which are frequently decorated at the end with strings of
beads.
Another peculiarity of the wedding ceremonies in the oases, is
that the bride’s gahaz, that is to say the articles contributed by her to
the joint household, are not, as in the case of the Egyptians, sent to
her future home in a separate procession, but are borne in the Zeffet
el Arusa. In the case of a rich bride these may consist of tea and
coffee cups, a huge kind of brass urn, not unlike the Russian
samovar, for heating water when making tea, and a brass tray.
These will be carried by one of her male friends on the tray in the
procession.
But in the majority of cases, amongst these poverty-stricken
people, the bride’s gahaz only consists of a few bowls and water
bottles, made of the local terra-cotta, and in that case they are
carried on a stool, which the bride herself places on the top of her
head when she walks in the procession, to her future husband’s
house. This stool perhaps corresponds to the canopy under which
the bride walks in the Egyptian villages, or possibly it may be the
representation of the chair for the bridegroom to place his turban on,
that Lane mentions as usually forming one of the articles of the
bride’s gahaz.
Two large flags, generally green in colour and covered with
suitable texts, are usually carried in the procession, which also
includes some male relations of the bride armed with guns, which
they blaze off at frequent intervals as it advances. At the rear of the
zaffeh is frequently a man beating a tar, or tambourine, and a boy
dressed all in white and riding on a horse, who has been introduced
into the zaffeh to save the expense of a separate circumcision
procession for him alone.
The zaffeh is followed by a feast at the bridegroom’s house, after
which the guests all offer presents, usually in the form of money, to
the bride. During this entertainment there is the usual native band
playing and sometimes a dancing girl performs—but this is only in
the case of the richer natives. Among the poorer ones, that is to say
a large majority of cases, there is no music or dancing, and
sometimes even no feast or presents.
The funeral procession to the grave presents some features not to
be seen, so far as I am aware, in the Nile Valley. While I was staying
in the Dakhla Oasis, quite a sensation was caused by the death of
the guardian of a sheykh’s tomb in the district, and I subsequently
saw his funeral procession, which much resembled that of a bride
going to her future home. The buffoon at the head of it was of course
absent, but instead of the usual group of chanting men to be seen in
Egypt, there were the same men as in the case of a wedding,
beating drums and cymbals. These were followed by male friends of
the deceased, and the same flags that figured in the bride’s
procession. Behind them came the bier, covered with a shawl, after
which followed the usual crowd of wailing women, the rear being
brought up by a woman carrying a tray covered by a cloth,
containing bread and dates for distribution to the poor after the
ceremony.