Question

If a monopolist practices perfect price discrimination, then it will have a. a greater total revenue and sell a greater output than if it were not practicing price discrimination. b. a smaller total revenue and sell a smaller output than if it were not practicing price discrimination. c. the same total revenue but sell a larger output than if it were not practicing price discrimination. d. the same total revenue but sell a smaller output than if it were not practicing price discrimination. The San Diego Transit System, a monopolist, can sell 6,000 units at a price of $5.50 per unit. Lowering price to all buyers by $1 raises the quantity demanded by 500 units. What is the change in total revenue resulting from this price change? a. $9,250 b. $3,750 c. $3,750 d. -$18,000 34. One reads the following in a newspaper: "Today the president and Congress agreed to impose new restrictive quotas on Japanese cars coming into the country." As a result, an economist would predict that the a. supply of cars in the country will remain the same and the average) price of cars will fall. b. supply of cars in the country will fall and the (average) price of cars will rise. c. supply of cars in the country will rise and the (average) price of cars will fall. d. demand for cars in the country will fall and the (average) price of cars will rise. e demand for cars in the country will rise and the average) price of cars will rise. 35. Which of the following statements is false? a. The shift factors for the supply curve are: income, preferences, prices of related goods, the number of buyers, and expectations of future price. b. A change in (own) price changes the quantity supplied of a good. c. A change in demand is graphically represented by a shift in the demand curve. d. A change in quantity demanded is represented by a movement along a given demand curve.

Answer 1

32) A. Perfect price discrimination allows a greater output and consequently a greater revenue since all consumers are charged their reservation prices

33) C. Total revenue changes from 6000*5.5 to 6500*4.5 which is a difference of - 3750.

34) B.

35) A. These are demand side factors.