Question

Additional Problem #3

Price Discrimination Cost Structure MC = 20 Revenue Structure P = 80 – Q

Competitive

Imperfect Comp.

1st Degree Price Discrimination

2nd Degree Price Discrimination $50, $30 & $20

Quantity __________ __________ xxxxxxxxx xxxxxxxxx

Price __________ __________ xxxxxxxxx xxxxxxxxx

Consumer Surplus __________ __________ ________ ________

Producer Surplus __________ __________ ________ ________

Total Surplus __________ __________ ________ ________

Dead-weight loss __________ __________ ________ ________

Answer 1

mc-20 P= 80-9 TR= Sog-g² MR = 80-29. 1st Degree Price Discrimination it is practice To Charge different price for each and every onit In this case Price of each unit is equal to consumers willingness To Pay. As a result AR and MR becomes equal Consider Tablo. P = 80-9 at vertical Axis at hosizontal Axis G=o P=0 = Q = 80 - P=80 and equilibrulm is where mR=mc AR = mc. AR= 80-9 - So-g=20 = Q = 80-20=60 or in this case

Cost and Revenue. 80 amc=20 20 → D = P = AR=MR bot so quantity quantity : 60 Price : 20 Consumer Susius : 0 why Because of first degree P.O. Producer surfius: (( 80-20) (60) : (60)(30) = 1800 Total Surfius: 1800 = Producer Surfius. Decid-belyh. Zero. (Because of first degree po). Loss : w

- 2nd degree Price discrimination: His Practice of Charging different price for different Blocks of onit Purchased. Cost and Revenue. | Case $60. Price. 8 h 8=80-9 Price so 50 = 80-9 2of Y = 30. t t - - - mc. D=AR. = 150 0 30 60 80 quantity. quantity : 30 Price = 50 , consumer Susplus = 1 (101 (30) Fooducer Suspius = (30-20)(30) = (30)(30) = 900 Total Surpius, Produce y + Consumer = 900+ 150 = 1050 Dead weight loss! ļ (30) (60) at P=20 9=60 : 900 I case $30 Į P = 80-8 = 30=80-9 =) Q = 50

Lost and Revenue. quantity = 50 Price = 30 Consumer Surhus, ₂ (50) (50) P=30 1250 Ik - MG 50 60 so quantity Producer Surfius. (10)(50) = 500 Total Surfius. - PS+cs = 1750 Owl: { (10)(1)-50. cost and Revenue case-3 $20 P= 80-9 9=600 p=mc=20 20= P = mc quantity = 60 Price = 20 6o 8o @ CS = (60)(60) = 1800 Ps=0 TS = CS=1800 DWC = 0 (Because P= mc) quantity