monopoly and price discrimination

Question 1

perfect competition qualities

Answer 1

large number of firms
homogenous goods
free entry
firms act as price takers
p=mc

Question 2

first degree price discrimination

Answer 2

if the firm knew each induviduals buyer valuation of the good - perfect price discrimination

Question 3

The incentive compatibility constraint

Answer 3

𝑢H( 𝑥H) −𝑟H ≥ 𝑢H( 𝑥L) −𝑟L (IC-H )-binding

𝑢L( 𝑥L) −𝑟L ≥ 𝑢L(𝑥H) −𝑟H. (IC)

Question 4

who is the incentive compatibitly constraint aimed at ?

Answer 4

type HH consumer as it is binding for them, they are indifferent between high and low good therefore may as well go for the better good. Therefore the incentive compatibility constraint ensures that each type chooses the plan intended for them.