14.4  Explain how price discrimination increases profit.

 14.5  Explain how monopoly regulation influences output, price, economic profit, and efficiency.

 14.4   Explain how price discrimination increases profit.

A.  Perfect price discrimination charges a different price for each unit sold, obtains the maximum price that each consumer is willing to pay for each unit, and redistributes the entire consumer surplus to itself.
B.  With perfect price discrimination, the monopoly produces the same output as would a perfectly competitive market, but rent seeking uses some of the surplus.

 14.5 Explain how monopoly regulation influences output, price, economic profit, and efficiency.

A.  Natural monopolies can produce at a lower price than competitive firms can, and monopolies might be more innovative than competitive firms.
B.  Efficient regulation requires that price equal marginal cost, but for a natural monopoly, such a price is less than average cost.
C.  Average cost pricing is a rule that covers a firm's costs and provides a normal profit but is inefficient.

Take the optional post-study bonus point quizzes on Monopoly on Saturday following Module 8.

Take the optional pre-study bonus point quizzes on Monopolistic Competition on Sunday preceding Module 9.