I don't understand anything on this page 3. Suppose that De Beers is a single-price monopolist in the market for diamonds. DeBeers has five potential customers: Raquel, Jackie, Joan, Mia, and Sophia. Each ofthese customers will buy at most one diamond-and only if the price is just equal to, orlower than, her willingness to pay. Raquel's willingness to pay is $400; Jackie's, $300;Joan's, $200; Mia's, $100; and Sophia's, $0. De Beers's marginal cost per diamond is$100. This leads to the demand schedule for diamonds shown in the accompanyingtable.Quantity ofDiamondsDemandedPrice of DiamondTotal RevenueMarginal Revenue$500$4001$300$2003$1004$0a. Calculate De Beers's total revenue and its marginal revenue. From yourcalculation, draw the demand curve and the marginal revenue curve.b. Explain why De Beers faces a downward-sloping demand curve.c. Suppose De Beers currently charges $200 for its diamonds. If it lowers the priceto $100, how large is the price effect? How large is the quantity effect?d. Add the marginal cost curve to your diagram from part a and determine whichquantity maximizes De Beers's profit and which price De Beers will charge.e. If a policymaker wanted to break up De Beer's and go back to a socially efficientmarket, based on your graph is it better for the consumer to purchase from DeBeer's or when it is a socially efficient market? Please explain from the graphwhy.

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3. Suppose that De Beers is a single-price monopolist in the market for diamonds. De Beers has five potential customers: Raquel, Jackie, Joan, Mia, and Sophia. Each of these customers will buy at most one diamond-and only if the price is just equal to, or lower than, her willingness to pay. Raquel's willingness to pay is $400; Jackie's, $300; Joan's, $200; Mia's, $100; and Sophia's, $0. De Beers's marginal cost per diamond is $100. This leads to the demand schedule for diamonds shown in the accompanying table. Price of Diamond Quantity of Diamonds Demanded Total Revenue Marginal Revenue $500 $400 $300 $200 $100 $0 2. 3. 4. 5

3. Suppose that De Beers is a single-price monopolist in the market for diamonds. De Beers has five potential customers: Raquel, Jackie, Joan, Mia, and Sophia. Each of these customers will buy at most one diamond-and only if the price is just equal to, or lower than, her willingness to pay. Raquel's willingness to pay is $400; Jackie's, $300; Joan's, $200; Mia's, $100; and Sophia's, $0. De Beers's marginal cost per diamond is $100. This leads to the demand schedule for diamonds shown in the accompanying table. Price of Diamond Quantity of Diamonds Demanded Total Revenue Marginal Revenue $500 $400 $300 $200 $100 $0 2. 3. 4. 5

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter9: Monopoly

Section: Chapter Questions

Problem 32P: Draw the demand curve, marginal revenue, and marginal cost curves from Figure 9.6, and identify the...

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