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6. Price discrimination and welfare Action Systems is a monopolist that is the only seller of the world's most popular gaming system. The following graph shows the market demand and marginal revenue curves Action Systems faces, as well as its marginal cost curve, which is constant at $20 per console. For simplicity, assume that fixed costs are equal to zero; this, combined with the fact that the firm's marginal cost (MC) is constant, means that its marginal cost curve is also equal to the average total cost (ATC) curve. First, suppose that Action Systems cannot price discriminate. That is, it must charge each consumer the same price for consoles regardless of the consumer's willingness and ability to pay for them. On the following graph, use the grey point (star symbol) to indicate the profit-maximizing price and quantity. Next, use the purple rectangle (diamond symbols) to shade in the Profit if Action Systems profit maximizes. Then, use the green triangle (triangle symbols) to shade in the consumer surplus (CS) if Action Systems profit maximizes. Finally, use the tan triangle (dash symbols) to shade in the deadweight loss in this market. 100 80 Monopoly Outcome Profit 8 PRICE (Dollars per console) Consumer Surplus MC = AC 20 Deadweight Loss 10 QUANTITY (Hundreds of consoles per month) Now, suppose that Action Systems can practice first-degree price discrimination-that is, it knows each consumer's willingness to pay for each console and is able to charge each consumer that amount.On the following graph, use the grey point (star symbol) to indicate the quantity sold under first-degree price discrimination by placing it in the appropriate place on the demand curve. (?) 100 Profit Maximizing Outcome BO PRICE (Dollars per console) 40 MC LAC 20 10 QUANTITY (Hundreds of consoles per month) Based on the previous graph, complete the following table for the case when Action Systems can price discriminate: Consumer Surplus Profit Deadweight Loss S Consider the welfare effects when the industry operates under a monopoly and cannot price discriminate versus when it can price discriminate. Under which market conditions is there deadweight loss associated with the profit-maximizing output? Check all that apply. O Under a single-price monopoly O Under neither first-degree price discrimination nor a single-price monopoly O Under first-degree price discrimination