Question

A monopoly’s goal using price discrimination is to increase A. marginal revenue b. total profit c....

A monopoly’s goal using price discrimination is to increase
A. marginal revenue
b. total profit
c. the per unit profit
d. total revenue

A monopolist will earn economic profits when
a. AVC is a minimum
b.ATC lies below the demand curve
c.ATC lies above the demand curve
d.ATC intersects the demand curve

PLEASE HELP FOR MICRO ECONOMIC. THANKS
Business   Economics   
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Homework Answers

Answer #1

Price discrimination can be done mostly in a monopolistic market due to the lack of competition.

The monopolist can charge different prices from different consumer for the same product.

The monopolist may make this discrimination based on the consumption of the consumer, geographical location or purely based on the demand of the product.

The monopolist produces where the marginal revenue equals marginal cost at output Qo. It changes price at Po and its average total cost is Co yielding a monopoly profit equal to the rectangle Po d c Co.

In simple terms the monopolist can make profit in both scenarios, irrespective of the price he is selling it to the consumer. The monopolist chose to sell at different prices to different consumers.

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