Suppose a Monopoly Sells to Two Identifiably Different Types of Customers,A

question 21

Multiple Choice

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 P_A = 10 - Q_A,and the inverse demand curve for group B is P_B = 18 - Q_B.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.

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Definitions:

Accountant

A professional who performs accounting functions such as audits or financial statement analysis, and is responsible for keeping and interpreting financial records.

Arithmetic Sequence

A sequence of numbers in which each term after the first is found by adding a constant difference to the preceding element.

Nth Partial Sum

The sum of the first 'n' terms in a sequence, used in series calculations.