Explain, using an appropriate graph how perfect price discrimination by a monopolist is efficient.
Explain, using an appropriate graph how perfect price discrimination by a monopolist is efficient.
Homework Answers
When a monopolist perfectly
price discriminates,it will produce where MC intersects the Demand
curve.
In this case, the monopolist will produce QM output which is higher than what it will produce at MC=MR output at PC price which is lower than what it will charge in case of MC=MR condition so, it will let the monopoly capture all the consumer surplus in the market and there will no deadweight loss in the market so it is efficient at this level of output.
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Explain, using an appropriate graph how perfect price
discrimination by a monopolist is efficient.
1. Monopoly and price discrimination: (a) What is the profit maximization condition for a (single-price) monopolist...
1. Monopoly and price discrimination: (a) What is the profit maximization condition for a (single-price) monopolist in the short-run? How about in the long-run? Is it efficient to have monopoly in the society? Why or why not? When does the government allow monopoly? (b) If a monopolist is allowed to price-discriminate, what are the three broad categories of discrimination? Explain each one of them with example.
A monopolist practicing (perfect) price discrimination has Select one: a. the same deadweight loss triangle as...
A monopolist practicing (perfect) price discrimination has Select one: a. the same deadweight loss triangle as a single-price monopolist. b. a larger deadweight loss triangle than a single-price monopolist has. O C. a deadweight loss triangle one-half the size of what it would be with uniform pricing. d. no deadweight loss triangle. 0: 51
Draw a graph illustrating the quantity the perfectly price discriminating monopolist will produce. Use a straight-line...
Draw a graph illustrating the quantity the perfectly price discriminating monopolist will produce. Use a straight-line demand curve, and include MC and ATC. On the graph fill in the economic profit of monopolist engaging in perfect price discrimination.
If a monopolist practices perfect price discrimination, then it will have a. a greater total revenue...
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...
The perfect price-discriminating monopolist in this diagram will produce ____ units of output, and a single-price...
The perfect 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 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/greater than/equal to) the amount of deadweight loss
found in a perfectly competitive market.
3 5 points Price $10...
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.
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 inQuestion options:1) arbitrage pricing.2) voodoo economics.3) perfect price discrimination.4) marginal cost pricing.
Price Discrimination Draw the graph for a monopoly with demand, marginal revenue, and marginal cost curves....
Price Discrimination Draw the graph for a monopoly with demand, marginal revenue, and marginal cost curves. Identify the profit-maximizing output level (Qm) and price (Pm). Suppose the monopolist sells Qm units of output at the regular price and then puts the product on sale at a lower price, Ps. Show the new price and quantity. Identify the consumer surplus of the additional sales. What happens to the firm's profits? Does price discrimination lead to a more efficient or less efficient...
The graph on the left shows a market in which a monopolist airline does not price-discriminate...
The graph on the left shows a market in which a monopolist
airline does not price-discriminate and charges $300 per ticket.
This generates a net revenue of $20,000. The graph on the right
shows a market in which the monopolist price-discriminates and
charges $200 to customers who buy their tickets at least two weeks
in advance, and $400 to customers who do not. This generates a net
revenue of $25,000.How much net revenue would this airline generate
if it were...
2 Give two examples of price discrimination. ? How does perfect price discrimination affect consumer surplus,...
2 Give two examples of price discrimination. ? How does perfect price discrimination affect consumer surplus, producer surplus, and total surplus?
With the aid of a diagram explain how a monopolist determines how much output to produce...
With the aid of a diagram explain how a monopolist determines how much output to produce and what price to charge. (2) Briefly describe price discrimination of the first, second and third degrees. (3) Explain the difference between the demand curve facing a monopoly and the demand curve facing a perfectly competitive firm (4) Explain why under monopoly, price is greater than marginal revenue, while under perfect competition, price is equal to marginal revenue.
1. Monopoly and price discrimination: (a) What is the profit maximization condition for a (single-price) monopolist in the short-run? How about in the long-run? Is it efficient to have monopoly in the society? Why or why not? When does the government allow monopoly? (b) If a monopolist is allowed to price-discriminate, what are the three broad categories of discrimination? Explain each one of them with example.
A monopolist practicing (perfect) price discrimination has Select one: a. the same deadweight loss triangle as a single-price monopolist. b. a larger deadweight loss triangle than a single-price monopolist has. O C. a deadweight loss triangle one-half the size of what it would be with uniform pricing. d. no deadweight loss triangle. 0: 51
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...
The perfect 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 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/greater than/equal to) the amount of deadweight loss
found in a perfectly competitive market.
3 5 points Price $10...
Price Discrimination Draw the graph for a monopoly with demand, marginal revenue, and marginal cost curves. Identify the profit-maximizing output level (Qm) and price (Pm). Suppose the monopolist sells Qm units of output at the regular price and then puts the product on sale at a lower price, Ps. Show the new price and quantity. Identify the consumer surplus of the additional sales. What happens to the firm's profits? Does price discrimination lead to a more efficient or less efficient...
The graph on the left shows a market in which a monopolist
airline does not price-discriminate and charges $300 per ticket.
This generates a net revenue of $20,000. The graph on the right
shows a market in which the monopolist price-discriminates and
charges $200 to customers who buy their tickets at least two weeks
in advance, and $400 to customers who do not. This generates a net
revenue of $25,000.How much net revenue would this airline generate
if it were...
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