Question

Explain how a monopolist can increase profits by price discriminating. What are the conditions necessary for...

Explain how a monopolist can increase profits by price discriminating. What are the conditions necessary for price discrimination

Homework Answers

Answer #1

monopolist can increase profits by price discrimination. price discrimination is a practice of charging different prices from different consumers of the same product sold. so, monoplist charges higher prices from the some consumer and lower prices from some consumer of the same product sold and increase their profit.

conditions necessary for price discrimination are-

1) monopolist must have monopoly bar (i.e price charged by monopolist should be greater than marginal cost)

2) monopolist is in position to seperate market into two or more sub markets

3) price elasticity in each sub market should be same

4) lower price consumer should not resale the product to high price consumer.

5) high price consumer should not directly purchase product from low price consumer

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Short essay: Explain how a monopolist can increase profits by price discriminating. B. What are the...
Short essay: Explain how a monopolist can increase profits by price discriminating. B. What are the conditions (4) necessary for price discrimination?    
This discussion focuses on how a price-discriminating monopolist can earn even higher profits than a monopolist...
This discussion focuses on how a price-discriminating monopolist can earn even higher profits than a monopolist charging a single price. The example uses an imaginary time machine to look at monopoly profits and consumer surplus.   The demand for time travel is shown below: “Steve” wants to travel back in time to see the dinosaurs; he is willing to pay as much as $200 to use the time machine. “Joyce” wants to relive this entire semester; she is willing to pay...
6.) Explain how the outcome from a perfect price discriminating monopolist will differ from the competitive...
6.) Explain how the outcome from a perfect price discriminating monopolist will differ from the competitive outcome. 5.) Show how, with perfect price discrimination, the monopolist wil provide the same level of output as would be produced in a perfectly competitve industry.
This discussion focuses on how a price-discriminating monopolist can earn even higher profits than a monopolist charging...
This discussion focuses on how a price-discriminating monopolist can earn even higher profits than a monopolist charging a single price. The example uses an imaginary time machine to look at monopoly profits and consumer surplus.   The demand for time travel is shown below: “Steve” wants to travel back in time to see the dinosaurs; he is willing to pay as much as $200 to use the time machine.“Joyce” wants to relive this entire semester; she is willing to pay up to...
Discuss and illustrate with a graph third degree price discrimination. What conditions are necessary and how...
Discuss and illustrate with a graph third degree price discrimination. What conditions are necessary and how would we expect it to affect the profits of the firm?
Assume that a pure monopolist is able to engage in perfect price discrimination and sell each...
Assume that a pure monopolist is able to engage in perfect price discrimination and sell each unit of the product at a price equal to the maximum price the buyer of that unit of the product would be willing to pay. Complete the table below by computing total revenue and marginal revenue for the price discriminating monopolist.                                                                        Total            Marginal            Total            Marginal                           Quantity      Price          revenue           revenue               cost                  cost                                          0           $34          $______                                          $ 20                                     1              32             ______          $______                   ...
) A price-discriminating monopolist sells in two separate markets such that goods sold in one market...
) A price-discriminating monopolist sells in two separate markets such that goods sold in one market are never resold in the other. It charges $5 in one market and $7 in the other market. At these prices, the absolute value of price elasticity in the first market is 0.5 and the absolute value of price elasticity in the second market is 1.3. How can the monopolist raise the profit for sure? Please write every possible way. (Raise or Lower price...
What are the conditions necessary for a firm to be able to price-discriminate in two markets?...
What are the conditions necessary for a firm to be able to price-discriminate in two markets? Identify different degrees of price discrimination.
1)A price discriminating monopolist sells in two separate markets such that goods sold in one market...
1)A price discriminating monopolist sells in two separate markets such that goods sold in one market are never resold in the other. It charges $5 in one market and $7 in the other market. At these prices, the absolute value of price elasticity in the first market is .5 and the absolute value of price elasticity in the second market is 1.3. How can the monopolist raise the profit for sure? Please write every possible way. (Raise or Lower price...
6. Calculate (a) the monopoly price, quantity, and profit for a firm facing a demand curve...
6. Calculate (a) the monopoly price, quantity, and profit for a firm facing a demand curve (1 pt) Q = 400 – 4P with constant MC = 40 Hint: Remember we use “inverse” demand curve where P(Q) to use the twice as steeply sloped rule. b) Now write out the 3 conditions necessary for a monopolist to be able to price discriminate. (1 pt) c) Consider a monopolist who can use 3rd degree price discrimination by separating the above demand...