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Monopoly Price Discrimination/Efficiency MC Practice1. Which of the following best defines perfect price discrimination?A firm charges a single price which is greater than the marginal cost of production.A firm charges all buyers their entire willingness to pay.A firm charges all buyers different prices based on varying costs of production.A firm charges some buyers one price and other buyers another price, but some consumer surplus remains.A firm charges some buyers one price and other buyers another price, but there is deadweight loss.2. Which of the following is true about a perfect price discriminating monopolist?It charges the same price to all buyersIt minimizes average total costIt creates deadweight loss by producing a quantity where price is greater than marginal cost.It produces a quantity that maximizes consumer surplus.It produces the same quantity as a perfectly competitive firm with the same costs.The graph shown here illustrates the demand curve, marginal revenue curve, and the cost curves for a profit-maximizing monopolist with constant costs and no fixed costs that cannot currently price discriminate.3. If conditions change and this firm can perfectly price discriminate, what is the value of deadweight loss if this firm can perfectly price discriminate?$0$2$12$44. Patel Industries is a profit maximizer that sells custom made hats and is the only producer in a market. It charges some customers more than other customers because the hats bought by some buyers cost Patel more to produce than the hats purchased by other buyers.Based on this information, each statement below is true EXCEPTPatel Industries is a price discriminating monopolist.Patel Industries operates in an industry with barriers to entry.Patel industries will produce the quantity where marginal cost equals marginal revenuePatel Industries has a downward sloping demand curve.Patel industries does not have a constant marginal cost curve5. All of the following are allocatively efficient EXCEPT which option?A perfectly competitive firm earning positive economic profit in the short runA single-price monopolistA perfectly competitive firm earning normal economic profit in the long runA perfectly competitive firm earning negative economic profit in the short run.A perfectly price discriminating monopolistReason: A single price monopolist charges a price higher than marginal cost, which means it is not allocatively efficient.The graph shown here illustrates the demand curve, marginal revenue curve, and the cost curves for a profit-maximizing monopolist with constant costs.6. What are represents the firm's producer surplus?PwaPxP2Q40PwfQz0PxadPzPwfPzThe graph shown here illustrates the demand curve, marginal revenue curve, and the cost curves for a profit-maximizing monopolist with constant costs.7. If this monopolist can price discriminate, what is the value of its profit?$9$48$76$36$18The graph shown here illustrates the demand curve, marginal revenue curve, and the cost curves for a profit-maximizing monopolist with constant costs.8. What area represents deadweight loss (“DWL”) if this firm chooses a single price and what is the deadweight loss if this firm can perfectly price discriminate?DWL=0 for a single price monopolist; DWL =0 for a perfect price discriminating monopolistDWL=fkj for a single price monopolist; DWL =0 for a perfect price discriminating monopolistDWL= PafPb for a single price monopolist; DWL = klm for a perfect price discriminating monopolistDWL=Kih for a single price monopolist; DWL = fjk for a perfect price discriminating monopolistDWL=klm for a single price monopolist; DWL = fjk for a perfect price discriminating monopolist9. Use the points to identify the consumer surplus and dead-weight loss for the monopoly.CSDWLABEBCJABEBDJABECDJACFBCJADGBDJ10. If the government regulates a natural monopoly by setting a price ceiling where the MC equals the demand thenthe monopoly will break even and make no economic profitthe monopoly will produce the socially optimal quantityconsumer surplus will decreasethe monopoly will make more profitthe monopoly will produce the productively efficient quantity11. If a non-price discriminating monopoly could suddenly start price discriminating and charge each consumer exactly what they are willing to pay, all of the following would occur EXCEPT:The demand would equal the MRThe monopoly would earn more profitThe consumer surplus would be zeroThere would be no dead-weight lossThe monopoly would charge all consumers higher prices ................
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