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Suppose a firm is a monopoly. Its marginal cost curve is flat, and its average cost curve is downward sloping (because it has a fixed cost).
1.) Using the point drawing
tool,
indicate the monopoly's profit-maximizing price and quantity in the figure if it cannot price discriminate. Label this point
'e 1e1.'
2.) Using the rectangle drawing
tool,
indicate the monopoly's losses at the no price discriminationprofit-maximizing price and quantity. Label this rectangle
'Losses 1Losses1.'
3.) Using the point drawing
tool,
indicate the monopoly's profit-maximizing quantity in the figure if it perfectly price discriminates and the price charged for the last unit produced. Label this point
'e 2e2.'
4.) Using the triangle drawing
tool,
indicate the monopoly's producer surplus with perfect price discrimination. Label this triangle
'PS 2PS2.'
Carefully follow the instructions above, and only draw the required objects.
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