If the NBA can sell Five courtside seats for $2000/each or Six courtside seats f

ID: 1153588 • Letter: I

Question

If the NBA can sell Five courtside seats for $2000/each or Six courtside seats for $1600/each, the marginal revenue from the sixth seat is?

Deadweight loss is a value that:

Is gained by consumers but lost by producers

Is gained by producers but lost by consumers

Gained by both

Lost by both

A single price monopolist will maximize its profit if it produces an amount of eight put such that:

Price equals marginal cost

Price equals marginal revenue

Marginal revenue equals marginal cost

Price equals average cost

Perfect price discriminators:

Reduce gain from trade

reduce quantity sold on the market

charge each customer for the maximum they are willing to pay

restrict output compared to competition

Price discrimination:

Always bad for consumers

Always bad for both

None

Price discrimination is bad in economic terms if:

Output is increased

Output stays the same or falls

There is arbitrage

Firm is able to prevent arbitrage

a) Marginal revenue = change in the revenue/change in the quantity.

With an extra ticket sold at a lower price, the revenue after selling 6th ticket will only be (6 x $1,600 - 5 x $2,000) / (6-5)

( 9,600 - 10,000 ) / 1

The marginal revenue will be -400.

b) Deadweight loss is the amount which is lost by both the producer and the customer.

c) Marginal revenue = Marginal cost that is the condition where the profit is maximized.

d) A price discriminator charges a different price to each of the consumers it is the amount they are willing to pay.

e) Price discrimination is bad for the consumer.

f) IF the output stays the same or falls, the price discrimination is bad in the economic terms.

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