The graph to the right represents the linear demand curve for each identical consumer in a market that a monopoly faces. Using nonlinear price discrimination analysis, suppose that the monopoly can make consumers a take-it-or-leave-it offer. Suppose the monopoly sets a price, p*, and a minimum quantity, Q*, that a consumer must pay to be able to purchase any units at all. What price and minimum quantity should it set to achieve the same outcome as it would if it perfectly price discriminated? The price should be $ and the minimum quantity is 100 90- 80- 70- 60- 50- 40- 30- 20- 10- 0- 0 P, $ per unit 10 20 MR 30 40 50 60 70 Q, Units per day 80 MC D 90 100

The graph to the right represents the linear demand curve for each identical consumer in a market that a monopoly faces. Using nonlinear price discrimination analysis, suppose that the monopoly can make consumers a take-it-or-leave-it offer. Suppose the monopoly sets a price, p, and a minimum quantity, Q, that a consumer must pay to be able to purchase any units at all. What price and minimum quantity should it set to achieve the same outcome as it would if it perfectly price discriminated? The price should be $ and the minimum quantity is 100 90- 80- 70- 60- 50- 40- 30- 20- 10- 0- 0 P, $ per unit 10 20 MR 30 40 50 60 70 Q, Units per day 80 MC D 90 100

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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