Explain why a monopoly that knows the demand curve of identical consumers can set a two-part tariff with the lump sum tariff equal to the total amount of potential consumer surplus
What will be an ideal response?
The producer wants to set the lump sum tariff equal to the competitive level of consumer surplus. This maximizes the producer surplus. The consumer surplus measures the difference between the consumer's value of the good and the price paid for each unit. Thus, the consumers are willing to pay up to the total amount of consumer surplus.
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During this century, court decisions on antitrust have:
a. changed from per se, to rule of reason, and back to per se. b. changed from rule of reason, to per se, and back to rule of reason. c. always emphasized per se. d. always emphasized rule of reason. e. varied from judge to judge without following any pattern.
Total variable costs: a. are costs associated with short-run fixed capital
b. are so named because they vary from firm to firm within an industry. c. increase as production increases. d. decrease as production increases.