Pricing with Market Power and Consumer Surplus Pat’s Patriotic Tattoosis the only tattoo parlor in town.Pat tattoos only images of the American flag. There are 20 consumers whoare willing to buy a tattoo. Each consumeris interested in buying only onetattoo, butthey vary in their willingness to pay. One consumeris willing to pay $20for a tattoo; anotheris willing to pay $19; a third, $18, down to the consumerleast willing to pay whohasareservationprice of $1. The Effects of Price Discrimination Use the exampleofPat’s Patriotic Tattoos to make some conclusions abouttheeffects of price discrimination. 8. What happensto consumersurplusif a firm successfully price discriminates? 9. What happenstothefirm’s profits if it successfully price discriminates? 10. What happensto the quantity supplied by a successful price-discriminating monopoly firm compared with a nonprice-discriminating monopoly firm?
Pricing with Market Power and Consumer Surplus
Pat’s Patriotic Tattoosis the only tattoo parlor in town.Pat tattoos only images of the American flag. There
are 20 consumers whoare willing to buy a tattoo. Each consumeris interested in buying only onetattoo,
butthey vary in their willingness to pay. One consumeris willing to pay $20for a tattoo; anotheris willing
to pay $19; a third, $18, down to the consumerleast willing to pay whohasareservationprice of $1.
The Effects of Price Discrimination
Use the exampleofPat’s Patriotic Tattoos to make some conclusions abouttheeffects of price
discrimination.
8. What happensto consumersurplusif a firm successfully
9. What happenstothefirm’s profits if it successfully price discriminates?
10. What happensto the quantity supplied by a successful price-discriminating
11. How doesthe quantity supplied by a successful price-discriminating monopoly firm compare.
with the quantity supplied by firms in a
12. How doesprice discrimination affect economic efficiency?
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