8. A monopolist with cost function c(q) = q faces two consumers whose demand functions are given below. Q₁ = 100-P 50-P (a) Suppose the monopolist is a uniform pricing firm (i.e.the monopolist can- not engage in any price discrimination). Find the firm's optimal pricing strategy. Calculate the firm's Lerner index. (b) What is the deadweight loss associated with this pricing strategy, if any? (c) Now, assume that price discrimination is possible. Find the monopolist's optimal second degree price-discrimination strategy. (d) Find the monopolist's optimal third degree price-discrimination strategy.

8. A monopolist with cost function c(q) = q faces two consumers whose demand functions are given below. Q₁ = 100-P 50-P (a) Suppose the monopolist is a uniform pricing firm (i.e.the monopolist can- not engage in any price discrimination). Find the firm's optimal pricing strategy. Calculate the firm's Lerner index. (b) What is the deadweight loss associated with this pricing strategy, if any? (c) Now, assume that price discrimination is possible. Find the monopolist's optimal second degree price-discrimination strategy. (d) Find the monopolist's optimal third degree price-discrimination strategy.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

8. A monopolist with cost function c(q) = q faces two consumers whose demand
functions are given below.
Q₁ = 100-P
50-P
Q₂
(a) Suppose the monopolist is a uniform pricing firm (i.e.the monopolist can-
not engage in any price discrimination). Find the firm's optimal pricing
strategy. Calculate the firm's Lerner index.
(b) What is the deadweight loss associated with this pricing strategy, if any?
(c) Now, assume that price discrimination is possible. Find the monopolist's
optimal second degree price-discrimination strategy.
(d) Find the monopolist's optimal third degree price-discrimination strategy.

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