The following graph shows the demand and marginal-cost functions faced by a perfectly-price- discriminating monopolist. The graph shows, for example, that the monopolist incurs a marginal cost of $50 to produce the first unit and sells that unit for $550. It incurs a marginal cost of $100 to produce the second unit and sells it for $500, without reducing the price on the first unit {like our good old village doctor}. Such a situation could arise if the monopolist could identify different customer groups (say, according to their income levels} and if the customers could not trade the good among each other. If they could, the prices in different markets would be equalized and the monopolist could not price discriminate. Why and how? Well, those who buy the good at a lower price could sell it to those who would otherwise be charged a higher price by the monopolist. Do we have such a good? Of course, we do. First, think about our village doctor again. Second, think of utilities. You cannot sail the electricity or natural gas that you buy from the utility company to your neighbor. In your work, draw the marginal revenue function as a line half way between the vertical axis and the demand function. 650 600 550 500 450 400 MC 350 300 250 200 150 100 50 ed Question 3 0 / 2 pts Consider the information in the file HW7 Perfect Price Discrimination. The monopolist will produce units to maximize profit. Consumer surplus will equal dollars while producer surplus will be dollars. The deadweight loss will equal dollars. Suppose now that the government prohibits price discrimination without forcing the monopolist to charge a price equal to marginal cost. As a result, consumer surplus equals dollars, producer surplus equals dollars, and the deadweight loss changes to dollars. By the way, this is an interesting example of the distinctions between efficiency, equality, and equity. Think about it! Before the government intervention, was the monopolist treating the consumers equally? Equitably? Was the situation economically efficient? What about after the intervention?' Question 4 0 / 1 Pts Consider the information in the le HW7 Perfect Price Discrimination. Suppose now that the government prohibits price discrimination and forces the monopolist to charge a uniform price equal to its marginal cost of production. As a result, consumer surplus will equal dollars, producer surplus will equal dollars, and the deadweight loss will change to dollars