This chapter explains that a firm that engages in second-degree price discrimination charges the same consumer different prices for different units of a good. You are a monopolist with many identical customers.
Each will buy either zero, one, or two units of the good you produce. A consumer is willing to pay 50 for the first unit of this good and 20 for the second. You produce this good at a constant average and marginal cost of 5 . For simplicity, assume that if a consumer is indifferent between buying and not buying that he will buy. a. If you could not engage in second-degree price discrimination, what price would you charge? How much profit per customer would you earn? b. Suppose you offer your customers what seems to be a very generous deal: Buy one at the regular price of 50, and get 60 percent off on a second. How many units of this good will each customer buy? How much profit per customer will you earn?
Question 2
If society decides it wants more of one good and ________, then it has to give up some of another good and incur some opportunity costs.
A) new resources are discovered B) all resources are fully utilized
C) technology advances D) resources are underutilized
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