Problem 3
C,
This form applies perfect price discrimination, the monopolist set all the price level on the
demand curve. That expands the output from Q* to Q . So, by perfect price discrimination,
e
firm increases profit by taking all CS and DWL.
D, Because the price discrimination is the practice of selling a good at different prices to
different consumers (or different quantity) to take consumer surplus and DWL. We also can
see on the graph that: (PS)=PS +CS+DWL
before

Preview text:

Problem 3 C,
This form applies perfect price discrimination, the monopolist set all the price level on the
demand curve. That expands the output from Q* to Qe. So, by perfect price discrimination,
firm increases profit by taking all CS and DWL.
The variable profit of the firm (PS)=PSbefore+CS+DWL
D, Because the price discrimination is the practice of selling a good at different prices to
different consumers (or different quantity) to take consumer surplus and DWL. We also can
see on the graph that: (PS)=PSbefore+CS+DWL