Exhibit 9.16

-Refer to Exhibit 9.16,which shows the cost and revenue curves faced by a monopolist.If this monopolist practices perfect price discrimination,the economic profit is _____

Question

Exhibit 9.16
 
-Refer to Exhibit 9.16,which shows the cost and revenue curves faced by a monopolist.If this monopolist practices perfect price discrimination,the economic profit is _____

Quizplus · Accepted Answer

If the monopolist practices perfect price discrimination, it charges each customer the maximum amount they are willing to pay, resulting in no consumer surplus. The monopolist captures all the surplus in the form of profit. Therefore, the economic profit is equal to the entire area under the demand curve and above the marginal cost curve, which is represented by area aec.

Exhibit 9.16 -Refer to Exhibit 9.16,which Shows the Cost and Revenue Curves