Question 3: in the figure below, the firm\'s(otal eonomie prottls equal MC ATC 1

Question

Question 3: in the figure below, the firm's(otal eonomie prottls equal MC ATC 10 MR AP ATC 10 15 20 Quantlity (units) A. 560 B. $200 C. $150 D. MR - MC XQuestion 4: Yas Waterland is offering a ticket for families of 4 people, which costs less than the price of 4 single tickets. This is an example of A. Single price setting of a monopolist B. Price discrimination of a monopolist Perfect price discrimination in a competitive market x D. Natural monopoly Question 5: Price discrimination, compared to a single-pricing strategy Allows the monopolist to extract additional consumer surplus Allows consumers to extract additional producer surplus C. Makes no difference to the monopolist D. Makes no difference to the consumers

Explanation / Answer

(Question 3) Option (A)

Profit is maximized when P = MR = MC = $10 and output = 20, with ATC = $7

Profit = Output x (Price - ATC) = 20 x $(10 - 7) = 20 x $3 = $60

(Question 4) Option (B)

The price of ticket for 4-member family is less than (i.e. different from) the price of ticket sold to individual buyers. So, different price is being charged for different customer segments, which is an example of price discrimination.

(Question 5) Option (A)

Compared to single-price monopoly, a price-discriminating monopolist can extract higher consumer surplus, earns more revenue and enjoys higher profits.

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