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Author Question: A perfect price discriminator receives a price equal to marginal revenue for each unit. What will ... (Read 106 times)

bobbysung

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on: Jul 1, 2018
A perfect price discriminator receives a price equal to marginal revenue for each unit.
 
  What will be an ideal response?

Question 2

A perfect-price-discriminating monopoly maximizes social welfare as measured by the sum of producer surplus plus consumer surplus.
 
  What will be an ideal response?


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frejo

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Reply #1 on: Jul 1, 2018
Answer to Question 1

True. A perfect price discriminator sets the price of each unit sold equal to the reservation price of the good. The price equals the maximum price a consumer will pay for a given unit. Thus, the price of each unit will equal the marginal revenue of each unit.

Answer to Question 2

True. Unlike the competitive market, however, social welfare is all producer surplus. There is no consumer surplus. Thus, while a perfect-price-discriminating monopoly is efficient, many are troubled by it based upon distributional issues.


bobbysung

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Reply #2 on: Jul 1, 2018
Thank you


frejo

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Reply #3 on: Jul 1, 2018
No problemo


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