Problem 1. Market demand is P = 100-0.25Q, where Q is the total quantity demanded by consumers. Monopoly's costs are C = 10Q. (10 marks) a) Calculate prices and quantities if the monopoly uses block pricing with two prices. Calculate CS, DWL and firm's profit and demonstrate on a diagram. b) Find firm's output and profit if the firm engages in perfect price discrimination. Show on a diagram. I
Problem 1. Market demand is P = 100-0.25Q, where Q is the total quantity demanded by consumers. Monopoly's costs are C = 10Q. (10 marks) a) Calculate prices and quantities if the monopoly uses block pricing with two prices. Calculate CS, DWL and firm's profit and demonstrate on a diagram. b) Find firm's output and profit if the firm engages in perfect price discrimination. Show on a diagram. I
Chapter25: Monopoly
Section: Chapter Questions
Problem 14E
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Question
![Problem 1.
Market demand is P = 100-0.25Q, where Q is the total quantity demanded by
consumers. Monopoly's costs are C = 10Q. (10 marks)
a) Calculate prices and quantities if the monopoly uses block pricing with two prices. Calculate
CS, DWL and firm's profit and demonstrate on a diagram.
b) Find firm's output and profit if the firm engages in perfect price discrimination. Show on a
diagram.
I](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcaa15c2a-5d73-4965-9b94-aa09fb474d04%2Fcb7212ed-bdbc-4f65-ad87-afbc3bea972d%2Fnxx4uha_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 1.
Market demand is P = 100-0.25Q, where Q is the total quantity demanded by
consumers. Monopoly's costs are C = 10Q. (10 marks)
a) Calculate prices and quantities if the monopoly uses block pricing with two prices. Calculate
CS, DWL and firm's profit and demonstrate on a diagram.
b) Find firm's output and profit if the firm engages in perfect price discrimination. Show on a
diagram.
I
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