*This preview shows
pages
1–2. Sign up to
view the full content.*

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.

This ** preview**
has intentionally

**sections.**

*blurred***to view the full version.**

*Sign up*
This is the end of the preview. Sign up
to
access the rest of the document.