Suppose a monopolist is able to charge each customer a price equal to that customer’s willingness-to-pay for the product. Then the monopolist is engaging in
Question options:
1) arbitrage pricing.
2) voodoo economics.
3) perfect price discrimination.
4) marginal cost pricing.
When producers indulge in price discrimination, they tend to charge different price from different consumer, given the assumption that they have a prior information of each individual’s demand curve. Since they know the reservation price (maximum price that the consumer is willing to pay for a product), they can maximize producer surplus
When the monopolist charges each customer his reservation price, then the monopolist is engaging in first degree price discrimination or Perfect price discrimination.
Hence option C.
Suppose a monopolist is able to charge each customer a price equal to that customer’s willingness-to-pay for the product. Then the monopolist is engaging in Question options: 1) arbitrage pricing. 2) voodoo economics. 3) perfect price discrimination.
3. (Figure: Price-Discriminating Monopolist 2) The perfectly price-discriminating monopolist in this diagram will produce units of output, and a single price monopolist would produce units of output. Consumer surplus under a perfectly price discriminating monopolist is dollars less than under a single-price monopolist. While, perfect price discrimination results in reduced consumer surplus, it (increases/decreases) producer surplus and ultimately results in deadweight loss that is (less than/equal to greater than the amount of deadweight loss found in a perfectly competitive market....
QUESTION 1 Which of the following conditions is NOT required for successful direct price discrimination? A. The seller must be able to prevent arbitrage between low-value and high-value buyers B. The seller should charge higher prices to high-value buyers C. The seller must offer different products for high-value and low-value groups of consumers D. The seller must be able to identify customers as high-value or low-value buyers QUESTION 2 Under a version of direct price discrimination, the seller is able...
Suppose that a monopolist faces the following costs and demand for its product: A. Complete the table above. (Draw your table on a piece of paper, take a picture with your phone and then attach the image to your answer here.) B. Given that the monopolist wants to maximise profits, what price will it charge, and how many units will it produce? C. Suppose that the monopolist is able to engage in first degree (perfect) price discrimination. How many units...
Suppose Barefeet is a monopolist that produces and sells Ooh boots, an amazingly trendy brand with no close substitutes. The following graph shows the market demand and marginal revenue (MR) curves Barefeet faces, as well as its marginal cost (MC), which is constant at $20 per pair of Ooh boots. For simplicity, assume that fixed costs are equal to zero; this, combined with the fact that Barefeet's marginal cost is constant, means that its marginal cost curve is also equal...
3. Managers at C-Pal Industries, a monopolist, face 100 identical individuals, each with an inverse demand curve given by P = 10 - Q C-Pal has constant marginal cost of $4 and fixed costs of $500. A. Draw the diagram showing each consumer's individual demand curve and marginal cost (= AVC since MC is constant). What are profit-maximizing price and quantity per customer, as well as profits per customer, when C-Pal engages in uniform pricing with no other pricing strategies...
7. Price discrimination and welfare Suppose Barefeet is a monopolist that produces and sells Ooh boots, an amazingly trendy brand with no close substitutes. The following graph shows the market demand and marginal revenue (MR) curves Barefeet faces, as well as its marginal cost (MC), which is constant at $30 per pair of Ooh boots. For simplicity, assume that fixed costs are equal to zero; this, combined with the fact that Barefeet's marginal cost is constant, means that its marginal cost...
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Please answer clearly and explain. Question 2 (35 points): (3rd Degree Price Discrimination) Let there be a monopolist firm and two groups of consumers. Suppose that marginal cost is defined by MC- 2. T'he demand that each consumer receives is given by Q,-50-pl 202 200-P 1) ( 4 points) Consider the monopolist engages in first degree price discrimina- tion only in market 2. Compute the monopoly profit in this market. ii) (4 points) Which group has a mhore inelastic demand...
Please answer clearly and explain. Thank you! Question 2 (35 points): (3rd Degree Price Discrimination) Let there be a monopolist firm and two groups of consumers. Suppose that marginal cost is defined by MC- 2. The demand that each consumer receives is given by 1 50- P 2Q2- 200 - P2 i) (4 points) Consider the monopolist engages in first degree price discrimina- tion only in market 2. Compute the monopoly profit in this market. ii) (4 points) Which group...
A) Suppose a monopoly sells to two identifiably different types of customers, A and B, who are unable to practice arbitrage. The inverse demand curve for group A is PA = 29 - QA, and the inverse demand curve for group B is PB = 19 - 2QB. The monopolist is able to produce the good for either type of customer at a constant marginal cost of 3, and the monopolist has no fixed costs. If the monopolist practices group...