part 6 7 needed just6. Again, assume that the average and marginal costs are constant and equal to 14. Now assumethatPat knowsthe tastes and preferencesofall consumers andthat the conditions thatallow price discrimination apply.(A) What quantity will Pat supply?(B) At whatprices will she sell tattoos?; , , $17, ,,(C) Whatis the amount of consumersurplusgenerated?CS=7. Without calculating profit, explain how Pat’s profits differ among cases 4, 5 and 6. First-Degree Price Discrimination3. Prove to yourself that a market price of $17 will generate a total consumer surplus of $6.Hint: The consumer surplus generated by the consumer willing to pay $20 is (20-17) x1= 3.CS =4. Assume that the average and marginal costs are constant and equal to 14. If Pat produces the per-fectly competitive quantity and charges the perfectly competitive price,(A) what price will Pat charge for a tattoo?.(B) what quantity wilI Pat supply?.(C) what is the amount of consumer surplus generated?,CS5. Assume that the average and marginal costs are constant and equal to 14. If Pat produces themonopoly quantity and charges the monopoly price,(A) what price will Pat charge for a tattoo?(B) what quantity will Pat supply?(C) what is the amount of consumer surplus generated?CS =6. Again, assume that the average and marginal costs are constant and equal to 14. Now assume thatPat knows the tastes and preferences of all consumers and that the conditions that allow price dis-crimination apply.(A) What quantity will Pat supply?(B) At what prices will she sell tattoos?$17,,(C) What is the amount of consumer surplus generated?CS =

Answered: Again, assume that the average and…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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part 6 7 needed just

6. Again, assume that the average and marginal costs are constant and equal to 14. Now assumethat
Pat knowsthe tastes and preferencesofall consumers andthat the conditions thatallow price discrimination apply.
(A) What quantity will Pat supply?
(B) At whatprices will she sell tattoos?
; , , $17, ,,
(C) Whatis the amount of consumersurplusgenerated?
CS=

7. Without calculating profit, explain how Pat’s profits differ among cases 4, 5 and 6.

First-Degree Price Discrimination
3. Prove to yourself that a market price of $17 will generate a total consumer surplus of $6.
Hint: The consumer surplus generated by the consumer willing to pay $20 is (20-17) x1= 3.
CS =
4. Assume that the average and marginal costs are constant and equal to 14. If Pat produces the per-
fectly competitive quantity and charges the perfectly competitive price,
(A) what price will Pat charge for a tattoo?.
(B) what quantity wilI Pat supply?.
(C) what is the amount of consumer surplus generated?,
CS
5. Assume that the average and marginal costs are constant and equal to 14. If Pat produces the
monopoly quantity and charges the monopoly price,
(A) what price will Pat charge for a tattoo?
(B) what quantity will Pat supply?
(C) what is the amount of consumer surplus generated?
CS =
6. Again, assume that the average and marginal costs are constant and equal to 14. Now assume that
Pat knows the tastes and preferences of all consumers and that the conditions that allow price dis-
crimination apply.
(A) What quantity will Pat supply?
(B) At what prices will she sell tattoos?
$17,
,
(C) What is the amount of consumer surplus generated?
CS =

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