Introduction to Microeconomics

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Refer to Table 5. The table shows each consumer's maximum willingness to pay for a monthly subscription to MLB.TV. Each consumer is interested in purchasing a single subscription per month. The marginal cost of a subscription is $10. If MLB.TV can practice first-degree price discrimination, how much producer surplus will it earn from these consumers in total?

$57

0%

$97

0%

$107

100%✨

$40

0%

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Refer to Table 4. Assume this monopolist's marginal cost is constant at $10. What is the maximum profit made by this single-price monopolist if there is no fixed cost?

$100

0%

$115

0%

$65

0%

$104

100%✨

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Refer to Scenario 5. Suppose the two airlines compete with each other many times, and thus, they play this game many times. The Star Airline tells Big Airline that it will charge a high price so long as the Big Airline charges a high price, but it will charge a low price forever if it detects the Big Airline charging a low price for just one round. Which of the following is correct for the Big Airline payoffs in two consecutive rounds, assuming the Big Airline wants to maximize its total profits by competing with the Star Airline in two rounds?

$20 million for each of the two rounds

0%

$50 million in the first round, and $20 million in the second round

100%✨

$40 million for each of the two rounds

0%

$50 million in the first round, and $0 million in the second round

0%

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Refer to Scenario 5. What profit does each airline make in the Nash equilibrium when they compete once?

Each airline makes $20 million.

100%✨

The profit made by the Star Airline is $0 and the one made by the Big Airline is $50 million.

0%

Each airline makes $40 million.

0%

The profit made by the Star Airline is $50 million and the one made by the Big Airline is $0.

0%

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Refer to Scenario 5. Which of the following is correct?

The dominant strategy for the Star Airline is high price, and the one for Big Airline is low price.

0%

The dominant strategy for the Star Airline is low price, and the one for Big Airline is high price.

0%

The dominant strategy for both airlines is low price.

100%✨

The dominant strategy for both airlines is high price.

0%

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