Econ Micro (book Only)
6th Edition
ISBN: 9781337408066
Author: William A. McEachern
Publisher: Cengage Learning
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Chapter 9, Problem 8P
To determine
Conditions required by the monopolist for successful
Concept Introduction:
Price discrimination refers to a strategy that enables different customers to pay different prices for the same product or service. The seller charges different prices from different buyers based on the certain criterion.
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Students have asked these similar questions
Figure 94 Monopolist
(dollars)
10
8
6
0
Quantity
MC
Refer to Figure 94. Suppose that the profit-maximizing/loss minimizing level of output is 40 units per day and the average fixed
cost and average variable cost of producing this amount is $4 $7, respectively.
(a) What is the total cost of producing 40 units per day? Show your work.
(b) What is the total profit earned/loss incurred by producing 40 units per day? Show your work.
(c) What price will the firm charge to maximize profit or minimize loss?
(d) Should the firm shut down or continue to produce in the short run? Explain.
3. Consider a monopolist who faces the following demand:
Demand: P= 100 – 10Q
MC= 50+20
a) Find the price quantity combination that maximizes profit for the monopolist.
b) Is the firm making positive, negative or zero profits?
(100,100)
Kareem
chooses
(60, 105)
(500, 400)
Saleem
chooses
Kareem
chooses
(50,420)
4. Calculate the SPNE/SPNES for the game stated above.
(1) what is an example of price discrimination that you have experienced ? is this price diesccrimination beneficial to consumers ? why yes or why no?
Chapter 9 Solutions
Econ Micro (book Only)
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- (c) Describe Price Discrimination? Explain whether Price discrimination is possible in a perfectly competitive market.arrow_forwardPrice 7. Monopoly and Price Elasticity Consider the relationship between monopoly pricing and the price elasticity of demand. If demand is inelastic, total revenue would increase when a monopolist a monopolist will its price. As a result, total cost would produce a quantity at which the demand curve is inelastic. .Therefore, Use the purple segment (diamond symbols) to indicate the portion of the demand curve that is inelastic. (Hint: The answer is related to the marginal- revenue (MR) curve.) Then use the black point (plus symbol) to show the quantity and price that maximizes total revenue (TR). - -2 10 Demand 4 Marginal Revenue 7 Quantity Inaltic Demand + Max TRarrow_forwardThe graph below presents the curves associated with the firm JT Minn.. JT Minn. is a monopolist that produces dishwashers. Move the point on the demand curve to represent the price JT Minn. would charge and the quantity at which they would produce. Price/ Cost (570,$20) (980,$33) Marginal I Revenue I Marginal Cost Demand Quantityarrow_forward
- Under what circumstances should the government permit price discrimination? Also list a few items that have low utility and low pricesarrow_forwardPrice (dollars per movie) Quantity demanded, weekend (movies per week) Quantity demanded, weekday (movies per week 18 0 0 15 100 0 12 200 0 9 300 100 6 400 200 3 500 300 22) Roxie's Movie Theatre has a monopoly and discovers that at $12 a movie, no one is buying movie tickets during weekdays. Roxie's conducts a survey and the table above reveals the results of the survey. Roxie decides to price discriminate between weekend and weekday moviegoers. The marginal cost of a showing a movie is $6. Roxie's charges ________ on weekdays and ________ on weekends. A) $9; $12 B) $6; $15 C) $6; $18 D) $3; $12 23) If a monopolist can perfectly price discriminate, it will A) charge the same price for each unit sold. B) produce until price elasticity of demand equals one. C) not be concerned with the market demand. D) charge a different…arrow_forwardThe following graph shows the demand (D) for cable services in the imaginary town of Utilityburg. The graph also shows the marginal revenue (MR) curve, the marginal cost (MC) curve, and the average total cost (ATC) curve for the local cable company, a natural monopolist. On the following graph, use the black point (plus symbol) to indicate the profit-maximizing price and quantity for this natural monopolist. (? 100 90 Monopoly Outcome 80 70 60 50 40 ATC 30 MC 20 10 MR D 2 6 8 10 12 14 16 18 20 QUANTITY (Number of subscriptions) Which of the following statements are true about this natural monopoly? Check all that apply. O In order for a monopoly to exist in this case, the government must have intervened and created it. O The cable company is experiencing diseconomies of scale. O The cable company is experiencing economies of scale. O It is more efficient on the cost side for one producer to exist in this market rather than a large number of producers. True or False: Without government…arrow_forward
- Please correct answer and don't use hand ratingarrow_forwardHow can a firm successfully undertake price discriminationarrow_forward3- A monopolist has set her level of output to maximize profit. The firm's marginal revenue is $10, and the price elasticity of demand is -2.0. The firm's profit maximizing price is approximately: 20 10 3761904 d) 40 Leave blankarrow_forward
- A profit-maximizing monopolist faces the market demand schedule provided and has a constant marginal cost of $5. If the monopolist engages in perfect price discrimination, its total revenue will equal which of the following? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forwardWhat conditions should exist for price discrimination. [arrow_forward90 80 MC 65 55 52 50 ATC D MR 10 20 35 45 50 Quantity of Output (Units) Refer to the graph above for a pure monopolist: The total profit (loss) for this monopolist is: ($525) $100 $525 $175 Dollars ($)arrow_forward
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