3. Use the diagram to show that a price discriminating monopolist earns more profit than one charging a single price. Show further that he enjoys a greater profit the more he can discriminate (that is, the more different prices he can charge). P 90 80 70 60 50 40 30 20 10 MC MR 1 2 3 4 5 6 7 8 9 Q

3. Use the diagram to show that a price discriminating monopolist earns more profit than one charging a single price. Show further that he enjoys a greater profit the more he can discriminate (that is, the more different prices he can charge). P 90 80 70 60 50 40 30 20 10 MC MR 1 2 3 4 5 6 7 8 9 Q

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Price Discrimination

Price discrimination or differential pricing is based on the principle that the seller will charge the buyer a price based on the buyer’s ability and willingness to pay for the product rather than applying uniform pricing for all.

Question

3. Use the diagram to show that a price discriminating
monopolist earns more profit than one charging a single
price. Show further that he enjoys a greater profit the more
he can discriminate (that is, the more different prices he can
charge).
Р
90
80
70
50
40
30
20
10
MC
MR
1 2 3 4 5 6 7 8 9 Q

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