### Economic Analysis of Monopoly PricingIf a monopoly faces an inverse demand curve of:\[ p = 450 - Q \]and has a constant marginal and average cost of $30, it can perfectly price discriminate. The following outlines the economic outcomes in terms of profit, consumer surplus, welfare, and deadweight loss under both perfect price discrimination and single-price profit-maximization scenarios.#### Perfect Price Discrimination- **Profit ($\pi$)**: $88,200- **Consumer Surplus (CS)**: $0- **Welfare ($W$)**: $88,200- **Deadweight Loss (DWL)**: $0In this scenario, the firm captures all consumer surplus, maximizing its own profit and ensuring total welfare with no deadweight loss.#### Single-Price Profit Maximization- **Profit ($\pi$)**: $44,100- **Consumer Surplus (CS)**: $22,050- **Welfare ($W$)**: $66,150- **Deadweight Loss (DWL)**: $22,050Here, the monopoly charges a single price, resulting in a lower profit compared to perfect price discrimination. However, some consumer surplus remains, and there is a deadweight loss due to inefficiencies in resource allocation.#### Conclusion- Perfect price discrimination benefits the monopolist by extracting maximum profit with no deadweight loss, but offers no consumer surplus.- Single-price maximization retains partial consumer surplus but creates a deadweight loss due to reduced efficiency. Total welfare is lower compared to perfect price discrimination.This analysis illustrates the trade-offs between different monopoly pricing strategies and their implications on market efficiency and consumer welfare.

In case of perfect price discrimination, profit maximizing output occurs where price equals the…

Profit from perfect price discrimination (x) is $88200. (Enter your response as a whole number.) Corresponding consumer surplus is (enter your response as whole numbers): welfare is and deadweight loss is Profit from single-price profit-maximization is z = $44100. (Enter your response as a whole number.) Corresponding consumer surplus is (enter your response as whole numbers): welfare is and deadweight loss is CS=$0. W = $ 88200 DWL = $0. CS=$ 22050 W = $ 66150 DWL = $ 22050

Profit from perfect price discrimination (x) is $88200. (Enter your response as a whole number.) Corresponding consumer surplus is (enter your response as whole numbers): welfare is and deadweight loss is Profit from single-price profit-maximization is z = $44100. (Enter your response as a whole number.) Corresponding consumer surplus is (enter your response as whole numbers): welfare is and deadweight loss is CS=$0. W = $ 88200 DWL = $0. CS=$ 22050 W = $ 66150 DWL = $ 22050

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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