Question

QUESTION 1

1. Please refer to the buyer willingness to pay values provided in the table on page 178 in the book (i.e., Customers A and B with Goods 1 and 2). If the monopolist only sold Good 1 by itself, what is the profit maximizing outcome for the monopolist?

   	A.	Sell zero units at a price of $3000
   	B.	Sell one unit at a price of $2800
   	C.	Sell two units at a price of $2300
   	D.	Sell two units at a price of $2000

2 points   

QUESTION 2

1. Please refer to the buyer willingness to pay values provided in the table on page 178 in the book (i.e., Customers A and B with Goods 1 and 2). If the monopolist only sold Good 2 by itself, what is the profit maximizing outcome for the monopolist?

   	A.	Sell zero units at a price of $2000
   	B.	Sell one unit at a price of $1700
   	C.	Sell two units at a price of $1200
   	D.	Sell two units at a price of $1000

2 points   

QUESTION 3

1. Please refer to the buyer willingness to pay values provided in the table on page 178 in the book (i.e., Customers A and B with Goods 1 and 2). What is the total profit if the monopolist sells Good 1 and Good 2 separately?

   	A.	$2400
   	B.	$4600
   	C.	$7000
   	D.	$9200

2 points   

QUESTION 4

1. Please refer to the buyer willingness to pay values provided in the table on page 178 in the book (i.e., Customers A and B with Goods 1 and 2). What is the profit maximizing price if the monopolist sells the two goods as a bundle?

   	A.	$3500 for Goods 1 and 2
   	B.	$4000 for Goods 1 and 2
   	C.	$4500 for Goods 1 and 2
   	D.	$5000 for Goods 1 and 2

2 points   

QUESTION 5

1. Metering is

   	A.	a type of indirect price discrimination
   	B.	a type of direct price discrimination
   	C.	an example of bundling
   	D.	an evaluation of a product

Use the following table to answer Ques- tions 4-6. Assume the cost of producing the goods is zero and that each consumer will purchase each good as long as the price is less than or equal to value. Consumer values are the entries in the following table. Consumer A ($) Consumer B ($) Good 1 2,300 2,800 Good 2 1,700 1,200

Answer 1

Q1

Answer

Sell two unit at price of $2300

Explanation :

Here good1 has two different price that consumer A and consumer B are willingness to buy.

So if monopolist want to sell good 1 at price of 2800 he can only sell to consumer B. If he do so he can get $2800 only.

But if he sell at $2300 he can sell it to both of the costumers. And will able to get 2300*2=4600.

Q2

Answer.

Sell two units at price of 1200

Explanation..

Here same as good 1. If monopolist sells the good 2 one unit then he only able to make it $1700.but if he will sell 2 unit at $1200 then he gets $2400.

Q3

Answer

$7000.

Explanation

Here the cost of production is zero, so the selling price will be profit. If he sells the good1 and good 2 at its profit maximization quantity then total profit will be (2300*2=4600)+(1200*2=2400)=7000.

Q4

Answer

$4000 for good 1 and good 2

Explanation

If he sells it with bundle then he can get 4000 profit... Becouse the price of both of the consumers for bundling becomes 4000.(2300+1700) or (2800+1200).

Here with bundling they may able to get profit of 8000 of they sells the product to both of the costumers. The total profit is more in bundling than separately.

Q5

Answer

A type of indirect price discrimination

Explanation

Becouse it identifies the value of customers by how intensively they use the product. Metering is a schemes are used to identify the high value consumer and allow for indirect price discrimination.