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2. For each statement below, state if it is true or false. (a) The deadweight loss created by a monopolist that sets a uniform price is (b) The deadweight loss created by a monopolist that does first-degree price dis- (c) The deadweight loss created by a monopolist that sets the optimal two-part positive crimination is positive tariff is positive discrimination is positive

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Answer #1

a. True, it is so because the monopolist charges price above the Perfect competition causing a dead weight loss to the economy.

b. False, since the monopolist charges maximum price to each individual which he/she is willing to pay. Hence no dead weight loss.

c. True, it is so because the two part tariff leads to some amount of loss to the economy again because of price not being equal to a perfect competition case.

d. True, It is so because dividing the market will not eliminate the dead weight loss to the economy.

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