Consider a monopoly using a two part tariff against consumers with downward sloping individual demand: (1) The monopolist will produce the efficient output. (ii) The monopolist will extract all surplus from consumers. O a. (1) holds only for homogenous consumers, but (ii) holds with hetrogeneous consumers as well. O b. Even with homogeneous consumers, the monopolist will not always be able to assure that both (I) and (ii) hold. O c. (i) and (ii) are true only when consumers are homogenous. O d. (ii) Holds only for homogeneous consumers, but (i) holds with hetrogeneous consumers as well.
Consider a monopoly using a two part tariff against consumers with downward sloping individual demand: (1) The monopolist will produce the efficient output. (ii) The monopolist will extract all surplus from consumers. O a. (1) holds only for homogenous consumers, but (ii) holds with hetrogeneous consumers as well. O b. Even with homogeneous consumers, the monopolist will not always be able to assure that both (I) and (ii) hold. O c. (i) and (ii) are true only when consumers are homogenous. O d. (ii) Holds only for homogeneous consumers, but (i) holds with hetrogeneous consumers as well.
Chapter1: Making Economics Decisions
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Transcribed Image Text:Consider a monopoly using a two part tariff against consumers with downward sloping individual demand:
(1) The monopolist will produce the efficient output.
(ii) The monopolist will extract all surplus from consumers.
O a. (1) holds only for homogenous consumers, but (ii) holds with hetrogeneous consumers as well.
O b. Even with homogeneous consumers, the monopolist will not always be able to assure that both (i) and (ii) hold.
O c. (i) and (ii) are true only when consumers are homogenous.
O d. (ii) Holds only for homogeneous consumers, but (i) holds with hetrogeneous consumers as well.
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