A Monopolist Who Has a Horizontal ATC Schedule and Perfectly

question 389

Multiple Choice

A monopolist who has a horizontal ATC schedule and perfectly price discriminates

• A) leaves buyers a decreased but still positive amount of consumer surplus.
• B) increases the amount of consumer surplus that is lost to the buyers and not gained by the monopolist.
• C) appropriates all consumer surplus as profit.
• D) does not change the amount of consumer surplus that buyers had before the monopolist perfectly price discriminated.

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Definitions:

Short-Run Profit

The profit earned by a firm in the short term, typically considering only variable costs and fixed costs remaining constant.

Market Price

The existing rate at which a commodity or service is offered for buying or selling in a marketplace.

Soybeans

A type of legume native to East Asia, widely grown for its edible bean which has numerous uses.

Shut-Down Price

The price at which a firm ceases production in the short run because the market price has fallen below the minimum average variable cost.