1. Suppose the inverse demand for a product produced by a single firm is given by P = 100 - 10Q and the firm has a marginal cost of production of MC = 10 + 10Q. a. If the firm cannot price discriminate, what is the profit-maximizing price and level of output? b. If the firm cannot price discriminate, what are the levels of producer and consumer surplus in the market? What is the deadweight loss? c. If the firm is able to practice perfect price discrimination, what output level would it choose? What are the levels of producer and consumer surplus and deadweight loss under perfect price discrimination?

1. Suppose the inverse demand for a product produced by a single firm is given by P = 100 - 10Q and the firm has a marginal cost of production of MC = 10 + 10Q. a. If the firm cannot price discriminate, what is the profit-maximizing price and level of output? b. If the firm cannot price discriminate, what are the levels of producer and consumer surplus in the market? What is the deadweight loss? c. If the firm is able to practice perfect price discrimination, what output level would it choose? What are the levels of producer and consumer surplus and deadweight loss under perfect price discrimination?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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