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Author Question: If a monopolist practices perfect price discrimination A) consumers surplus will be equal to the ... (Read 79 times)

captainjonesify

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on: Jun 29, 2018
If a monopolist practices perfect price discrimination
 
  A) consumers surplus will be equal to the deadweight loss.
  B) consumer surplus will be zero.
  C) the firm will break even in the long run.
  D) producer surplus will equal consumer surplus.

Question 2

How can a firm have a negative valued added, as supposedly some state-owned businesses did in the former Soviet Union? What has to be true for value added to be negative?
 
  What will be an ideal response?
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amandanbreshears

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Reply #1 on: Jun 29, 2018
Answer to Question 1

B

Answer to Question 2

A negative value added means that the cost of the intermediate goods exceeds the price of the final product produced using the intermediate goods. For value added to be negative, a firm would use its primary factors of production, such as labor and capital equipment, to produce a product from the intermediate goods that is less valuable than the intermediate goods themselves.


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