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What is the firm's total revenue when it produces two units? What is the relationship between the price and the marginal revenue of the fourth unit?
Suppose the firm sets a uniform price to maximize profit. What is the largest value of F for which the firm could earn zero profit?
For what values of F can a profit-maximizing firm engaging in perfect first-degree price discrimination earn at least zero economic profit?
How much would the firm's profit increase compared with the uniform profit-maximizing price you found in (a)?
How much extra surplus does the producer capture when it can engage in first-degree price discrimination instead of charging a uniform price?
How might bundling increase a firm's profits? When is bundling not likely to increase profits?
How might screening help a firm price discriminate? Give an example of screening and explain how it works.
Will third-degree price discrimination necessarily improve its profit? Would the firm ever be worse off with price discrimination?
With first-degree price discrimination, why is the marginal revenue curve the same as the demand curve?
Why must a firm have at least some market power to price discriminate? Why must a firm prevent resale if it is to price discriminate successfully?
Suppose that the market for cigarettes in a particular town has. What should the excise tax be in order to raise the required amount of money?
How much would you expect the equilibrium price paid by consumers to change? How much would you expect the equilibrium price received by producers to change?
In the new equilibrium with the tax, what price will producers receive and consumers pay if the supply curve is a) Perfectly elastic?
Analyze the reporter's claim by determining the price buyers pay before and after the subsidy, and provide intuition to explain why the reporter is correct or i
If an excise tax of $4 leads to an increase in the price of gadgets to $24, what must be true about the own-price elasticity of supply for gadgets?
Why does a market clear when the government gives producers a subsidy of $S per unit? Why does the market not clear with a production quota?
Why are agricultural price support programs, such as acreage limitation and government purchase programs, often very costly to implement?
Will a price ceiling always increase consumer surplus? Will a price floor always increase producer surplus?
Why will consumer surplus increase? Will producer surplus increase? Will there be a deadweight loss?
A tax of size $T is currently imposed in the market. Suppose the tax is doubled. By what multiple will the deadweight loss increase?
Why can a monopolist's marginal revenue be negative for some levels of output? Why is marginal revenue negative when market demand is price inelastic?
Why is demand curve facing a monopolist market demand curve? Why is marginal revenue for a monopolist less than market price for positive quantities of output?
How much would the government need to spend to achieve this? What is the total deadweight loss if the government is successful in its objective?
Suppose the government bans the import of television sets. How much would domestic producer surplus and deadweight loss change?
In a free market the price is $30 per ton. If an excise tax of $2 per ton is imposed in the market, what will be the resulting deadweight loss?