Explain why a monopoly that knows the demand curve of identical consumers can set a two-part price with the lump sum tariff equal to the total amount of potential consumer surplus
What will be an ideal response?
The producer wants to set the lump sum price equal to the competitive level of consumer surplus. This maximizes the producer surplus. The consumer surplus measures the difference between the consumer's value of the good and the price paid for each unit. Thus, the consumers are willing to pay up to the total amount of consumer surplus.
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Which of the following is TRUE?
I. Checks are considered money because they can be used as a medium of exchange. II. Checks represent a transfer of money. A) I only B) II only C) both I and II D) neither I nor II
Even though households do not actually purchase certain items, the government estimates and adds to the consumption component what the household would pay for these items in the marketplace. An example of this type of item is
a. a car that an individual builds from parts of old cars b. food that a farm family grows for themselves c. a pond that a household member digs by hand d. police and fire protection e. a barn that a household builds on their own property
If the Fed buys bonds in the open market, the money supply decreases
a. True b. False Indicate whether the statement is true or false
Each of the following would be considered a common resource except a
a. water reservoir. b. streetlight. c. a congested road. d. book from a public library.