Suppose a monopoly's inverse demand curve is P = 100-Q, it produces a product with a constant marginal cost of $20, and it has no fixed costs. How much more or less is the deadweight loss if the monopoly can practice perfect price discrimination compared to it practicing uniform pricing? OA. The deadweight loss is smaller by $800. OB. The deadweight loss is greater by $800. OC. The deadweight loss is smaller by $1600. OD. The deadweight loss is greater by $1600.
Suppose a monopoly's inverse demand curve is P = 100-Q, it produces a product with a constant marginal cost of $20, and it has no fixed costs. How much more or less is the deadweight loss if the monopoly can practice perfect price discrimination compared to it practicing uniform pricing? OA. The deadweight loss is smaller by $800. OB. The deadweight loss is greater by $800. OC. The deadweight loss is smaller by $1600. OD. The deadweight loss is greater by $1600.
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter9: Monopoly
Section: Chapter Questions
Problem 33P: Draw a monopolists demand curve, marginal revenue, and marginal cost curves. Identify the...
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Transcribed Image Text:Suppose a monopoly's inverse demand curve is P = 100-Q, it produces a product with a constant marginal cost of $20,
and it has no fixed costs. How much more or less is the deadweight loss if the monopoly can practice perfect price
discrimination compared to it practicing uniform pricing?
OA. The deadweight loss is smaller by $800.
B. The deadweight loss is greater by $800.
OC. The deadweight loss is smaller by $1600.
D. The deadweight loss is greater by $1600.
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