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
Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter24: Price-searcher Markets With High Entry Barriers
Section: Chapter Questions
Problem 15CQ
Related questions
Question
Finish the problem
![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
>](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2947d49e-3998-4a3d-88de-6f82d3b2ada0%2F889ff891-8418-499a-9e22-c3d10d8b22c9%2Fja6r5qp_processed.png&w=3840&q=75)
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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