How does a competitive market compare to a monopoly that engages in perfect price discrimination?
a. In both cases, total social welfare is the same.
b. Total social welfare is higher in the competitive market than with the perfectly price discriminating monopoly.
c. In both cases, some potentially mutually beneficial trades do not occur.
d. Consumer surplus is the same in both cases.
a
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What will be an ideal response?
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What will be an ideal response?
The above figure shows a payoff matrix for two firms, A and B, that must choose between selling basic computers or advanced computers. How many Nash equilibria are there?
A) 0 B) 1 C) 2 D) 4
At the point at which P=MC, suppose that a perfectly competitive firm's MC = $100, its AVC = $80 and its AC = $110. This firm should
A) shut down immediately. B) continue operating in the short run. C) try to take advantage of economies of scale. D) try to increase its advertising and promotion.