Suppose a monopoly sells to two identifiably different types of customers, A and B, who are unable to practice arbitrage. The inverse demand curve for group A is PA = 10 - QA, and the inverse demand curve for group B is PB = 18 - QB. The monopolist is able to produce the good for either type of customer at a constant marginal cost of 2, and the monopolist has no fixed costs. If the monopoly uses
uniform pricing, the deadweight loss is 36. If the monopolist is able to practice group price discrimination, the deadweight loss is
A) 30.
B) 32.
C) 34.
D) 36.
B
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Suppose the market for hot pretzels in New York City is perfectly competitive. What is true of demand in this market?
a. The demand curve facing each seller is perfectly elastic. b. The demand curve facing each seller is perfectly inelastic. c. The market demand curve is perfectly elastic. d. The market demand curve is perfectly inelastic. e. The market demand curve is elastic.
A baker of chocolate chip cookies is likely to have a ______________ price elasticity of supply than does the seller of rare baseball cards due to ______________.
A. more elastic; the availability of inputs B. less elastic; the availability of inputs C. less elastic; a shorter adjustment time D. less elastic; a more flexible production process