CourseCourseConceptConceptDocsDocuments

AP Microeconomics 4.3 Price Discrimination Questions

Review the conditions and pricing logic for discrimination, then analyze how perfect discrimination changes monopoly output, profit, surplus, and efficiency.

Syllabus
Effective Fall 2022
Course
AP Microeconomics

Exam points

  • identify market power, separable buyers and prevention of resale as conditions for price discrimination
  • charge a lower price to the group with more elastic demand and a higher price to the less elastic group
  • explain how discrimination captures consumer surplus and can increase monopoly output and profit
  • find perfect-discrimination output where demand equals marginal cost and calculate revenue or profit
  • compare perfect discrimination with one-price monopoly using consumer surplus, producer surplus and deadweight loss

Covered syllabus points

PRD-3.B—b. Explain (using graphs where appropriate) equilibrium, firm decision making, consumer surplus, producer surplus,…—Topic 4.3

Question 1

[Maximum number: 2]

The graph below shows the demand curve (D), marginal revenue curve (MR), marginal cost curve (MC), average total cost curve (ATC), and long-run average total cost curve (LRATC) for a monopolist.

Figure for Question 1 — AP Microeconomics

Question (a)

(a)

Suppose the monopolist perfectly price discriminates and chooses the quantity that maximizes profit. Determine the dollar value of each of the following.

[ 2 ]

Question (i)

(i)

The monopolist's profit

[ 1 ]

Question (ii)

(ii)

The consumer surplus

[ 1 ]
All question bank results loaded