Author Question: Which of the following is the best example of how goods and services should be produced? A) ... (Read 72 times)

NguyenJ · **on:** Jul 1, 2018

Which of the following is the best example of how goods and services should be produced?

A) complying with the technical specifications in the production of an aircraft
B) the production of jet aircraft for the air force or for a commercial airline
C) the use of additional workers versus the use of machines in the production of goods
D) the production of a new manufacturing facility

Question 2

Consider a monopolist which sells output in two markets, the home market and the foreign market. Initially the monopolist is unable to price discriminate and sets a single price for both markets.

However, the demand in the foreign market is such that at the price the monopoly sets, no goods are sold in the foreign market. If the monopolist is then able to price discriminate, will the overall deadweight loss increase or decrease? Explain.

helenmarkerine · **Reply #1 on:** Jul 1, 2018

Answer to Question 1

C

Answer to Question 2

Since the monopolist is not pricing the good to sell in the foreign market, the price the monopolist sets when setting a single price is the same as if the monopolist were to only sell to the home market.