A monopolist faces a demand curve, Q=100-2P and has a constant marginal cost of 10. It has no fixed costs. If the monopolist can only charge a single price, it should charge P*= 30 v and produce Q*= 40 v units. If the monopolist can charge a separate price for any units sold beyond Q*, then the price of these additional units will v. A monopolist that charges a separate price lead to additional profit if it is any price in the range of 10-30 for additional units is practicing first-degree v price discrimination. The profit-maximizing price for the additional units is 10 v. Hint: Draw a picture. Think about what the additional profit is for an arbitrary quantity of additional units, then maximize this function.
A monopolist faces a demand curve, Q=100-2P and has a constant marginal cost of 10. It has no fixed costs. If the monopolist can only charge a single price, it should charge P*= 30 v and produce Q*= 40 v units. If the monopolist can charge a separate price for any units sold beyond Q*, then the price of these additional units will v. A monopolist that charges a separate price lead to additional profit if it is any price in the range of 10-30 for additional units is practicing first-degree v price discrimination. The profit-maximizing price for the additional units is 10 v. Hint: Draw a picture. Think about what the additional profit is for an arbitrary quantity of additional units, then maximize this function.
Chapter1: Making Economics Decisions
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Transcribed Image Text:A monopolist faces a demand curve, Q=100-2P and has a constant marginal cost of 10. It has no fixed costs.
If the monopolist can only charge a single price, it should charge P*= 30
and produce Q*=
40
v units.
If the monopolist can charge a separate price for any units sold beyond Q*, then the price of these additional units will
v. A monopolist that charges a separate price
lead to additional profit if it is any price in the range of 10-30
for additional units is practicing first-degree
v price discrimination.
The profit-maximizing price for the additional units is
10
v. Hint: Draw a picture. Think about what the
additional profit is for an arbitrary quantity of additional units, then maximize this function.
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