Safari File Edit View History Bookmarks Window Help Q Tue Nov 16 12:45 PM ng.cengage.com C + 88 Bb Content x MindTap - Cengage Learning MindTap - Cengage Learning Course Hero Course Hero CENGAGE |MINDTAP Q Search this course minoo v Aplia Homework: Chapter 15 X nt 7. Price discrimination and welfare Suppose Barefeet is a monopolist that produces and sells Ooh boots, an amazingly trendy brand with no close substitutes. The following graph shows tics the market demand and marginal-revenue (MR) curves Barefeet faces, as well as its marginal cost (MC), which is constant at $30 per pair of Ooh A-Z boots. For simplicity, assume that fixed costs are equal to zero; this, combined with the fact that Barefeet's marginal cost is constant, means that its marginal-cost curve is also equal to the average-total-cost (ATC) curve. ots First, suppose that Barefeet cannot price-discriminate because it is a single-price monopoly. That is, it must charge each consumer the same price for Ooh boots regardless of the consumer's willingness and ability to pay. asI xIsx On the following graph, use the black point (plus symbol) to indicate the profit-maximizing price and quantity. Next, use the purple points (diamond symbol) to shade the profit, the green points (triangle symbol) to shade the consumer surplus, and the black points (white plus symbol) to shade the xIsx deadweight loss in this market without price discrimination. (Note: If you decide that consumer surplus, profit, or deadweight loss equals zero, 1 2 indicate this by leaving that element in its original position on the palette.) Confi bongo xisx Hyp xIsx 100 90 S 80 Monopoly Outcome A+ 70 60 Profit 7 PM ars per pair of Ooh boots) A V 40 Consumer Surplus NOV C. 16 estvSafari File Edit View History Bookmarks Window Help Q Tue Nov 16 12:45 PM ng.cengage.com C + 88 Bb Content x MindTap - Cengage Learning MindTap - Cengage Learning Course Hero Course Hero CENGAGE MINDTAP Q Search this course minoo v Aplia Homework: Chapter 15 X nt indicate this by leaving that element in its original position on the palette.) (? tics A-Z 100 ots 90 Monopoly Outcome 80 asT .xIsx 8 8 Profit A xIsx PRICE (Dollars per pair of Ooh boots Consumer Surplus MC = ATC Confi bongo xIsx 20 Deadweight Loss Hyp 10 xIsx MR Demand 0 80 160 240 320 400 480 560 640 720 800 S QUANTITY (Pairs of boots) A+ Now, suppose that Barefeet can practise perfect price discrimination-that is, it knows each consumer's willingness to pay for each pair of Ooh boots 7 PM and is able to charge each consumer that amount NOV 16 stvSafari File Edit View History Bookmarks Window Help Q Tue Nov 16 12:45 PM ng.cengage.com C + 88 Bb Content x MindTap - Cengage Learning Mind Tap - Cengage Learning Course Hero Course Hero CENGAGE |MINDTAP Q Search this course minoo v Aplia Homework: Chapter 15 X nt Now, suppose that Barefeet can practise perfect price discrimination-that is, it knows each consumer's willingness to pay for each pair of Ooh boots and is able to charge each consumer that amount. tics On the following graph, use the black point (plus symbol) to indicate the profit-maximizing quantity sold and the lowest price at which the firm sells its A-Z boots. Next, use the purple points (diamond symbol) to shade the profit, the green points (triangle symbol) to shade the consumer surplus, and the black points (white plus symbol) to shade the deadweight loss in this market with perfect price discrimination. (Note: If you decide that consumer ots surplus, profit, or deadweight loss equals zero, indicate this by leaving that element in its original position on the palette. ) (? asI xIsx 100 xIsx 90 1 2 80 Monopoly Outcome Confi bongo xIsx 8 8 Profit Hyp xIsx g A PRICE (Dollars per pair of Ooh boots Consumer Surplus C MC = ATC A 20 Deadweight Loss 10 Demand 0 0 160 240 320 400 480 560 640 720 800 QUANTITY (Pairs of boots) NOV 16 stvSafari File Edit View History Bookmarks Window Help Q Tue Nov 16 12:45 PM ng.cengage.com C + 88 Bb Content x MindTap - Cengage Learning MindTap - Cengage Learning Course Hero Course Hero CENGAGE | MINDTAP Q Search this course minoo v Aplia Homework: Chapter 15 X nt 50 A 40 PRICE (Dollars per pair Consumer Surplus MC = ATC tics 30 A-Z 20 Deadweight Loss ots Demand 0 80 160 240 320 400 480 560 640 800 QUANTITY (Pairs of boots) asI xIsx Consider the welfare effects when the industry operates under a monopoly and cannot price-discriminate versus when it can price-discriminate. xIsx 1 2 Confi Complete the following table by indicating under which market conditions each of the statements is true. (Note: If the statement isn't true for either bongo xIsx single-price monopolies or perfect price discrimination, leave the entire row unchecked. ) Check all that apply. Statement Single-Price Monopoly Perfect Price Discrimination Hyp xIsx Barefeet produces a quantity less than the efficient quantity of Ooh boots. O O Total surplus is maximized. O There is deadweight loss associated with the profit-maximizing output. At Grade It Now Save & Continue Continue without saving NOV 16 stv