A Firm with a Demand Curve P = 10 -

question 29

Multiple Choice

A firm with a demand curve P = 10 - Q is a perfect price discriminating monopolist with zero marginal costs and fixed costs of 12. Consider the following two statements comparing the price discriminating case with a single price monopolist. 1) In this case consumers are better off as a group because more of the product is produced. 2) Producers are better off because they have higher profits. Which of the following comments about these statements is true?

• A)Both statements are true.
• B)Only the first statement is true.
• C)Only the second statement is true.
• D)Both statements are false.

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