Econ 100A PS4 - Department of Economics University of...

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Econ 100A-Spring 2007 Page 1 Problem Set 4 D e p a r t m e n t o f E c o n o m i c s Spring 2007 University of California, Berkeley Prof. Woroch Economics 100A PROBLEM SET 4 Due: Thursday, March 22, 2007, 8:00 AM (in lecture) TRUE or FALSE or UNCERTAIN and EXPLAIN : For each statement below, decide whether it is true or false or cannot be determined given the information, and explain the reasoning behind your answer in a few sentences. When appropriate, provide a diagram. 1. If the generation of electricity is known to have a cost function given by C(Q) = 100 + Q 2 , where Q is measured in mega-watts per year, then the market for electricity is a natural monopoly. 2. When there is only fixed cost to production, and no variable cost, a monopolist will set price to maximize its revenue, even if that price is below the firm’s average total cost. 3. All consumers are worse off under perfect (first decree) price discrimination practiced by a monopolist compared to the case when the firm must set a single price. 4.
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Econ 100A PS4 - Department of Economics University of...

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