HW- ch9 (10-23-06)

HW- ch9 (10-23-06) - no consumption inefficiencey because...

Info icon This preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Dorian Dreher Homework- Ch.9; Questions 4,5,6 10/23/06 4.) if the monopoly can price discriminate, then yes the total output will expand. All forms of price discrimination raise the total output and increase total profits. 5.) The first consumer's demand curve forms a rectangle. It is horizontal from zero to 1 unit at $10 adn then drops to zero at 1 unit. The maximum consumer surplus that can be captured is the entire area under the demand curve. the monopoly captures this consumer surplus if it sets its price equal to $10. Similarly, the monopoly captures all the consumer surplus of the second consumer y charging $9. There is
Image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: no consumption inefficiencey because there are no further transactions between the conusmers that would increase at least on conumser's welfare. 6.) A firm price discriminates to increase it's profits; however it can only price discriminate under certain conditions. If under these conditions (having market power, knowing ho to charge the higher price to, and the ability to limit/prevent resales) then a firm who does NOT price discriminate cannot hope to profit more than a firm who is price discriminating....
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern