Serena is profit-maximizing monopolist selling of her own patented perfume, whose demand and marginal cost curves are as shown. 1. Serena is profit-maximizing monopolist selling of her own patented perfumle, whose demand and marginal cost curves are as shown. Relative to the consumer surplus that would result at the perfectly competitive quantity and price, how much consumer surplus is lost from her selling at the monopolist's profit-maximizing quantity and price? $ per ounce 60 50 45 40 20 15 10 0 468 12 Ounces/day 16 MC 24 2. In the first problem, how much total surplus would Serena have made if she acted as a perfectly price-discriminating monopolist? Show your work. 3. Explain the difference between the demand curve faced by a perfectly competitive firm and the demand curve faced by a monopoly. Draw both curves and explain why they are different. How do these demand curves cause marginal revenue to differ across the two types of firm? 4. Explain the incentives created by regulating a natural monopoly according to the second-best solution of P-ATC 5. Why might retailers pay their staff to hammer dings and dents into refrigerators and stoves?

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
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Chapter1: Making Economics Decisions
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Serena is profit-maximizing monopolist selling of her own patented perfume,
whose demand and marginal cost curves are as shown.
1. Serena is profit-maximizing monopolist selling of her own
patented perfume, whose demand and marginal cost curves are as shown. Relative
to the consumer surplus that would result at the perfectly competitive quantity
and price, how much consumer surplus is lost from her selling at the monopolist's
profit-maximizing quantity and price?
$ per ounce
60
50
45
40
30
20
15
10
0
468 12 16
Ounces/day
MC
24
2. In the first problem, how much total surplus would Serena have made if she acted as a
perfectly price-discriminating monopolist? Show your work.
3. Explain the difference between the demand curve faced by a perfectly competitive
firm and the demand curve faced by a monopoly. Draw both curves and explain why
they are different. How do these demand curves cause marginal revenue to differ across
the two types of firm?
4. Explain the incentives created by regulating a natural monopoly according to the
second-best solution of P-ATC
5. Why might retailers pay their staff to hammer dings and dents into refrigerators and
stoves?
Transcribed Image Text:Serena is profit-maximizing monopolist selling of her own patented perfume, whose demand and marginal cost curves are as shown. 1. Serena is profit-maximizing monopolist selling of her own patented perfume, whose demand and marginal cost curves are as shown. Relative to the consumer surplus that would result at the perfectly competitive quantity and price, how much consumer surplus is lost from her selling at the monopolist's profit-maximizing quantity and price? $ per ounce 60 50 45 40 30 20 15 10 0 468 12 16 Ounces/day MC 24 2. In the first problem, how much total surplus would Serena have made if she acted as a perfectly price-discriminating monopolist? Show your work. 3. Explain the difference between the demand curve faced by a perfectly competitive firm and the demand curve faced by a monopoly. Draw both curves and explain why they are different. How do these demand curves cause marginal revenue to differ across the two types of firm? 4. Explain the incentives created by regulating a natural monopoly according to the second-best solution of P-ATC 5. Why might retailers pay their staff to hammer dings and dents into refrigerators and stoves?
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