The Following Figure Depicts the Downward-Sloping Market Demand (D)curve for a Five-Day

question 126

Multiple Choice

The following figure depicts the downward-sloping market demand (D) curve for a five-day western Caribbean cruise on Carnival Cruise Lines.The price (P) is per person in U.S.dollars,and the quantity (Q) is the number of passenger tickets sold.This figure also shows the company's relevant marginal revenue (MR) curve and marginal cost (MC) curve.Use this figure to answer the following questions:

-If Carnival Cruise Lines moves from a monopolist model that charges a single price to a perfect price-discrimination model,there would be a ________ in total welfare.

• A) gain of $800,000
• B) loss of $400,000
• C) gain of $400,000
• D) loss of $1.2 million
• E) gain of $1.2 million

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Definitions:

Consolidated Tax Return

A tax return that combines the tax liability of all subsidiary companies with that of the parent company, simplifying tax filing for corporate groups.

Corporate Distributions

Payments made by a corporation to its shareholders from earnings, typically in the form of dividends.

Dividends

Payments made to shareholders out of a corporation's profits.

Subchapter S Corporation

A form of corporation in the United States that meets specific Internal Revenue Code requirements, allowing it to pass income directly to shareholders and avoid double taxation.