homework6spring2011

Workingbyhimselfrickycancapturetherockaudienceandearna

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Unformatted text preview: testing
all
of
the
psychics
that
 practiced
in
the
United
States,
they
found
that
there
was
only
one
who
was
 actually
what
she
claimed
to
be.
Now,
the
lone
psychic
Miss
Cleo,
is
a
monopolist
 psychic.
Miss
Cleo's
marginal
cost
for
providing
her
services
is
a
constant
$5.
 Now
that
she
is
a
monopolist,
Miss
Cleo
decides
to
take
advantage
of
her
gift
and
 to
practice
first‐degree
price
discrimination.
 d. What
is
the
equation
for
marginal
revenue?
 e. On
a
separate
graph
from
parts
(a)
and
(b),
graph
the
demand,
 marginal
revenue,
and
marginal
cost
for
Miss
Cleo.
 f. Calculate
the
equilibrium
quantity
of
psychic
consultations
in
this
 market.

 g. What
are
the
producer,
consumer,
and
total
surpluses?
Label
them
on
 your
graph.
 h. What
is
the
deadweight
loss
from
Miss
Cleo
acting
as
a
perfect
price
 discriminating
monopolist?
Give
a
conceptual
explanation
of
why
this
 is
the
case
(i.e.
using
notions
of
efficiency).
 
 5.
Third
Degree
Price
Discrimination:
S...
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This note was uploaded on 12/04/2013 for the course ECONOMICS 101 taught by Professor Kelly during the Spring '10 term at Wisconsin.

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