Question

THESE 3 QUESTIONS IM NOT SURE OF PLEASE ANSWER THEM IN 150 WORDS FOR EACH QUESTION. THANK YOU!

1.

First degree – the seller must know the absolute maximum price that every consumer is willing to pay.

Second degree – the price of the good or service varies according to quantity demanded.

Third degree – the price of the good or service varies by attributes such as location, age, sex, and economic status.

Give an example of price discrimination. If you can, try to find some from each of the above degrees within the same industry.  

2.

How might a professional sports team be considered a monopoly when there are other such teams in the nation?

Then, give your own example of a monopoly. Be sure to explain and justify why you believe they are a monopoly.

3.

Discuss what public-utility regulatory agencies ultimate goals are. What are they attempting to accomplish through their actions? Are they justified in doing so? Some guiding questions are:

Is there such as thing as a good monopoly?

How to they try to eliminate the misallocation of resources that results from monopoly?

Are fair-return policies enough/effective?

Answer 1

First Degree- Under this seller/monopolist charges different prices for each unit of product from each buyer and charge to each buyer the maximum which each buyer can pay and leaves no consumer surplus to each buyer/consumer. In this perfect price descrimination buyers demand curve is equal to sellers marginal revenue curve.

For example doctor and lawyer charges different fee to their different patients and customers according to their income level, nature of case and according to complexity of illness.

Second Degree- Under this a monopolist charges seperate prices from different buyers for different blocks and quantities of a commodity from buyers and in this way takes away a part but not all of consumer surplus from them. For example a monopolist can charge high price for first 5 blocks of commodity and medium price for next 5 blocks of commodity and lower price for the next 5 blocks of commodity.

Third Degree- Under this seller charges different prices to two or more than two buyers based on their demand output sold in that market and purchasing power of the different buyers.

For example a an electricity seller/company can charge low price for electricity for domestic users and high price for commercial use/industry. Another example one seller can sell his product on high price in the local market and on lower price in the international market.

2 For example in a nation there is only one A grade national football club and rest of other others are b and c grade club and it's players are not allowed/eligible to play the international games.

Only A grade national team is allowed to play/compete in international matches and that's why creates monopoly situation.

3 Public utility regulatory agencies ultimate goal is to regulate the prices in order for monopolist to not maximise his profit at the cost of consumers by charging very high price and also effective distribution of public utility by controlling prices in in order to make the public utility affordable for every segment of society.

Public utility regulatory agencies attempts to achieve below.

1 Remove restrictive trade practices and fixation of high prices.

2 Reduce the incidence of market sharing agreements.

3 Remove unfair competition.

4 Restrict the control of very large share of the market.

5 Prevent unfair price descrimination.

Yes due to above reasons public utility regulatory agencies are justified to control high prices, high profit charged by monopolist and to remove restrictive trade practices, etc.

Yes there are good monopoly also, for example if any public utility, i.e. electricity diadistribut is controlled by government then it tries to restrict the price to a level in order to make it affordable to every customer, be it domestic or commercial.

Government controlled electricity company or petrol/diesel company tries to control and restrict the prices to a lower level in order to make it affordable to every one and this will also help controlling the inflation in the economy and and in turn will increase purchasing power and savings to the consumers.

A fair return policy is effective but not enough because for it to be effective, return policy should be clear and should give maximum ease to customers at the time of returning the peoduct and it should aim to not to harass and deduct any money from the actually paid by customers for the return product.