A6 Consider the case where there is a consumer in the market with a demand of P = 80 - 4q. A monopolist hasvariable costs of VC = 0.5q2 where P is price and q the quantity sold. The monopolist engages in first degreeprice discrimination using a two-part tariff, what is the fixed fee (F) and per-unit fee charged (p)?OF=256, p = 8=OF 80, p = 12OF=512, p = 16OF=128, p=4

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there is a onsu 2 where P is price and q the a two-part quantity sold. Th tariff, what is the fixed fee (F) and

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Concept explainers

Comparative Advantage and Absolute Advantage Analysis

The theory of absolute advantage was given by Adam Smith in the year 1776.

Question

Consider the case where there is a consumer in the market with a demand of P = 80 - 4q. A monopolist has
variable costs of VC = 0.5q2 where P is price and q the quantity sold. The monopolist engages in first degree
price discrimination using a two-part tariff, what is the fixed fee (F) and per-unit fee charged (p)?
OF=256, p = 8
=
OF 80, p = 12
OF=512, p = 16
OF=128, p=4

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