Suppose a consumer wants just one unit of a good and is will
Question and Solution
Suppose a consumer wants just one unit of a good and is willing to pay at most $10. Draw the demand curve and calculate
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Suppose a consumer wants just one unit of a good and is willing to pay at most $10. Draw the demand curve and calculate the maximum consumer surplus that can be extracted. Suppose that there is a second consumer who also demands just one unit and is willing to pay at most $9. A perfectly discriminating monopoly charges the first consumer $10 and the second consumer $9. Why is there no consumption inefficiency as occurs in third-degree price discrimination?
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