Question
This table show's five possible buyers willingness to pay for a particular good Buyer Willingness to pay ($) for each unit Catherine $15.00 Joshua $11.00
This table show's five possible buyers willingness to pay for a particular good
Buyer Willingness to pay ($) for each unit
Catherine $15.00
Joshua $11.00
James $9.50
Jesus $6.00
Sandra $4.50
Question A: Let the market price under perfect competition is $3.00, calculate the total consumer surplus in the market
Question B: Assuming that the seller of the good is a monopolist, and he knows each person's willingness to pay. Further a seller incurs marginal cost, that is, 3 ($) per unit which remains constant. If each person has a unit demand and a monopolist decides to discriminate the price (in particular, the first-degree price discrimination) what will be the consumer and producer surpluses?
Question C: Comparing your answers from (a) and (b), discuss the implications of having market power
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