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Homework answers / question archive / A monopoly is producing at the quantity of output where MR = MC
A monopoly is producing at the quantity of output where MR = MC. At this output, AFC = $30 and P = $20. Based on this information, we can tell the firm has an economic loss and should definitely shut down in the short run. True O False Question 20 1 pts A recent Black-Friday special at Best Buy offered a computer and a monitor for a price of $799. In another offer, the special included a computer, a monitor, keyboard, and mouse for a price of $859. Which of the following is correct? This is an example of third-degree price discrimination. This is an example of second-degree price discrimination. This is an example of first-degree price discrimination. This is not an example of price discrimination.
19.
Answer: False
A firm should shut down if the average variable cost (AVC) is not covered by the price. AVC is not given here but AFC is given. The price ($20) is lower than AFC ($30) but this is not the shut-down criterion. Since AVC is not given, which may be higher or lower than price, we cannot say definitely about shutdown.
20.
Answer: 1st option
3rd degree price discrimination.
It includes a special offer in a particular time, day, or period; such as buy-one-get-one free. This happens here, since there are combined prices for products below their usual prices on a particular day. This is the way of attracting more customers.
1st degree is not applicable here, since individual customer is not featured here.
2nd degree is not applicable here, since there is no two-part pricing.
