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c. Now suppose that the monopolist can perfectly price discriminate. What quantity will it produce? d. In terms of social welfare, total surplus will be highest in the pricing scheme described in part v and lowest in the pricing scheme described in part e. In terms of profitability, profit will be highest in the pricing scheme described in part v and lowest in the priceing scheme described in part

c. Now suppose that the monopolist can perfectly price discriminate. What quantity will it produce? d. In terms of social welfare, total surplus will be highest in the pricing scheme described in part v and lowest in the pricing scheme described in part e. In terms of profitability, profit will be highest in the pricing scheme described in part v and lowest in the priceing scheme described in part

ENGR.ECONOMIC ANALYSIS
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. a. If the monopolist can only charge a single price, it should charge P*= 30 v and produce Q*= 40 v units. b. 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 10-30 v. A monopolist that charges a separate price for additional units is practicing first-degree v price discrimination. c. Now suppose that the monopolist can perfectly price discriminate. What quantity will it produce? d. In terms of social welfare, total surplus will be highest in the pricing scheme described in part v and lowest in the pricing scheme described in part e. In terms of profitability, profit will be highest in the pricing scheme described in part v and lowest in the priceing scheme described in part >
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. a. If the monopolist can only charge a single price, it should charge P*= 30 v and produce Q*= 40 v units. b. 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 10-30 v. A monopolist that charges a separate price for additional units is practicing first-degree v price discrimination. c. Now suppose that the monopolist can perfectly price discriminate. What quantity will it produce? d. In terms of social welfare, total surplus will be highest in the pricing scheme described in part v and lowest in the pricing scheme described in part e. In terms of profitability, profit will be highest in the pricing scheme described in part v and lowest in the priceing scheme described in part >
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