Question

Score: 0 of 6 pts 5 of 10 (8 complete)> Hw Score: 36%, 21.6 of 60 Text Question 2.6 Question Help Suppose a firm is a monopoly. Its marginal cost curve is flat, and its average cost curve is downward sloping (because it has a fixed cost). 1.) Using the point drawing tool, indicate the monopoly's profit-maximizing price and quantity in the figure if it cannot price discriminate. Label this point'e 2.) Using the rectangle drawing tooi, indicate the monopoly's losses at the no price discrimination profit-maximizing price and quantity. Label this rectangle 'Losses 3.) Using the point drawing tool, indicate the monopoly's profit-maximizing quantity in the figure if it perfectly price discriminates and the price charged for the last unit produced. Label this point e2 4.) Using the triangle drawing tool, indicate the monopoly's producer surplus with perfect price discrimination. Label this triangle 'PS2- AC Carefully follow the instructions above, and only draw the required objects. MR Q, Tickets per concert

Answer 1

Losses price. S per ticket AC 91€ O, Tickets per concert

1, 2) When the monopoly cannot price discriminate, it will set MC=MR and produce at e1 level of price and quantity where it will incur a loss equal to the shaded area as shown above.

price. S per ticket Q, Tickets per concert

3, 4) When the monopoly perfectly price discriminates, it will set P=MC for profit maximization so, all the area of the triangle would be captured as the producer surplus.