Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
![True/False
1. Monopoly with perfect price discrimination will reach profit equals consumer surplus
of perfect competition market plus profit of perfect competition market, whether in
short run or long run.
2. Perfect price discrimination can reduce economic welfare because output decreases
beyond that which would result under monopoly pricing.
3. The inefficiency associated with monopoly is due to overproduction of the good.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F54d67fa7-d702-4740-b7cb-9a94bc76105e%2F09ef275c-4f41-4175-b1c3-4983046f8ef0%2Fmflurp_processed.jpeg&w=3840&q=75)
Transcribed Image Text:True/False
1. Monopoly with perfect price discrimination will reach profit equals consumer surplus
of perfect competition market plus profit of perfect competition market, whether in
short run or long run.
2. Perfect price discrimination can reduce economic welfare because output decreases
beyond that which would result under monopoly pricing.
3. The inefficiency associated with monopoly is due to overproduction of the good.
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
Step 1
Monopoly: It refers to that competition in which the producer has all the power in the market. The producer is the price maker in the monopoly market and has a great influence on the market.
Perfect competition: It refers to the competition in which the producer has to take the price, and the small numbers of the firms are there in the market, which does not have any sufficient rate of influence on the market.
Step 2
- The first statement is not true because the monopoly cannot charge the price as perfect because they are price makers in the market. The monopoly cannot reach the perfect competition producers' profits because the firms are not able to produce on the MR=MC curve.
- This statement is true because as the perfect price discrimination will occur, this will reduce the welfare of the economy, and the people will have to fight for an equal amount of the goods. It will decrease welfare, and monopoly pricing will occur, and the producers will try to charge different prices from different consumers.
- The monopoly will never do overproduction, and the inefficiency occurs because of the producer's high prices and due to which this statement is false.
Step by step
Solved in 3 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
![Principles of Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781305585126/9781305585126_smallCoverImage.gif)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
![Managerial Economics: A Problem Solving Approach](https://www.bartleby.com/isbn_cover_images/9781337106665/9781337106665_smallCoverImage.gif)
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
![Managerial Economics & Business Strategy (Mcgraw-…](https://www.bartleby.com/isbn_cover_images/9781259290619/9781259290619_smallCoverImage.gif)
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education