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ECON1210_COMMON02 ECON1210_COMMON02 [2024]
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How many of the following goods/services may be provided efficiently by free markets?
A) MilkB) Bread loafC) Fishing in public watersD) EducationE) National defenseF) LighthousesG) StreetlightH) Law enforcementI) FireworkJ) AIDS drug
The figure below shows a monopolist practicing perfect price discrimination. Calculate the amount of consumer surplus in this market.
Suppose a monopolist expects to encounter 8 customers in a typical day. Their reservation prices are sorted and shown in the table below.
Customer
|
Reservation Price ($)
|
A
|
30
|
B
|
25
|
C
|
22
|
D
|
20
|
E
|
18
|
F
|
16
|
G
|
13
|
H
|
10
|
If the marginal cost is $9, how many customers will the monopolist serve?
Continue with the previous question. What will be the monopolist’s economic profit?
Continue with the previous question. The monopolist is very experienced in the business and knows the reservation price of each of his customers. If he is allowed to charge any price he likes to any consumer, how many customers will he serve?
Continue with the previous question. How much will the monopolist charge?
Continue with the previous question. What will be the monopolist’s new economic profit?
(i) Tying is a form of price discrimination in which one good, called the base good, is tied to a second good called the variable good.
(ii) Firms price discriminate by pricing the base good above cost and the variable good below cost.
(iii) Bundling requires products to be purchased together in a bundle or package.
If a monopolist can perfectly price discriminate, then the Marginal Revenue equals to: