Question 1
Refer to the information provided in Figure 13.11 below to answer the question(s) that follow.
Refer to Figure 13.11. Suppose a monopolist faces the demand and costs in the figure and is able to perfectly price discriminate. What is the economic welfare loss from having a monopoly instead of a perfectly competitive industry supplying widgets?
◦ $0
◦ $4,000
◦ $16,000
◦ Indeterminate from the given information.
Question 2
Refer to the information provided in Figure 13.11 below to answer the question(s) that follow.
Refer to Figure 13.11. Suppose a monopolist faces the demand and costs in the figure and is able to perfectly price discriminate. If the monopoly supplies 400 widgets, it will
◦ break even.
◦ maximize profits.
◦ suffer an economic loss.
◦ earn a profit, but less than it would earn if it produced 500 widgets.
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