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 \( P^* = \_\_\_\_ \) and produce \( Q^* = \_\_\_\_ \) units.If the monopolist can charge a separate price for any units sold beyond \( Q^* \), then the price of these additional units will lead to additional profit if it is any price in the range of \(\_\_\_\_\). A monopolist that charges a separate price for additional units is practicing \(\_\_\_\_\) price discrimination.The profit-maximizing price for the additional units is \(\_\_\_\_\). Hint: Draw a picture. Think about what the additional profit is for an arbitrary quantity of additional units, then maximize this function.

Answered: A monopolist faces a demand curve,…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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 \( P^* = \_\_\_\_ \) and produce \( Q^* = \_\_\_\_ \) units.

If the monopolist can charge a separate price for any units sold beyond \( Q^* \), then the price of these additional units will lead to additional profit if it is any price in the range of \(\_\_\_\_\). A monopolist that charges a separate price for additional units is practicing \(\_\_\_\_\) price discrimination.

The profit-maximizing price for the additional units is \(\_\_\_\_\). 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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A monopolist has the capacity to determine pricing because they are the only producer in the market. When the demand curve is downward sloping, the monopolist must cut the price to increase unit sales. The price in a market with competition is lower than the equilibrium price a monopolist sets.

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