term 2 lecture 7 - monopoly behaviours

Question 1

what is uniform pricing?

Answer 1

when each consumer is charged the same price from every consumer regardless of the number of units bought

Question 2

what is the first degree of price discrimination?

Answer 2

charge different consumers different price for different quanties bought. discrimination across consumers and across quantity

Question 3

what is second degree price discrimination?

Answer 3

charge different price for different quantities bought - discrimination across quantities but not across consumers types

Question 4

what is third degree price discrimation?

Answer 4

charge different price for different types of consumers but no discrimination across quantities bought ie senior rail cards, home vs international student fees

Question 5

what is time based price discrimination?

Answer 5

discrimination based on the time of purchase, peak and off peak travel fares

Question 6

what is the net welfare equal to in first degree price discrimination?

Answer 6

all the net welfare is equal to the producer surplus
there is no deadweight loss and consumer surplus is equal to zero.

Question 7

what would the monopolist charge as the price for the first degree price discrimination?

Answer 7

the monopolist will charge a price that is equal to the marginal willingness to pay

Question 8

what does the monopolist know for second degree price discrimination>

Answer 8

the monopolist knows there exist two types of consumers; high willingness and low willingness. however they cant distinguish the consumers from one another. hidden information problem- if he could they would carry out first degree.