Assume that all consumers have identical demand curves for local telephone servi

Question

Assume that all consumers have identical demand curves for local telephone service, and the producer of such service is a monopoly. Compare price, output, profit and consumer surplus when (a) the monopoly set a uniform price fir the product. (b) the monopoly uses a two-part traiff

Explanation / Answer

assuming there is a tariff that seems to make price > normal eq price. price goes up, output down This would lower consumer surplus (higher price = less from that, less output = less from that) since it is a monopoly it would make to maximize profit, therefore a shift along the demand curve hurts profit.

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