PS8-2 - Rice University ECON 211, Fall 2007 Problem Set 8...

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Rice University ECON 211, Fall 2007 Problem Set 8 Due on Thursday/Friday, November 15/16 Question-1: Using the demand equation P=10-Q and MC=AC=$2 show the consumer surplus producer surplus and total surplus on a graph and also calculate numerically for a. Perfect price discriminating monopoly (first degree) b. A non price discriminating monopoly. c. From an efficiency point of view, which one is superior to other? d. Is it possible to have a group of consumers to be better off under the perfectly price discriminating monopoly? Explain why? Question-2 : A sandwich shop offers the following price schedule to its costumers. Buy the first sandwich for $5, the second for $4, the third for $3 and the fourth for $2. Assume that on a given day 100 consumers buy the first sandwich, 70 buy the second sandwich, 40 buy the third sandwich and 15 buy the fourth sandwich. Assume MC=$2. a.) Draw the daily demand for sandwiches at the sandwich shop. b.) Calculate total revenue of the shop.
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PS8-2 - Rice University ECON 211, Fall 2007 Problem Set 8...

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