Micro Economics For Today
Micro Economics For Today
10th Edition
ISBN: 9781337613064
Author: Tucker, Irvin B.
Publisher: Cengage,
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Chapter 9, Problem 12SQ
To determine

 The profit maximizing output of the monopolist.

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✓ demand and lies Consider a monopolist facing a downward-sloping demand curve. Average revenue is ✓ marginal revenue. Compared to a competitive market, a monopolist sells a ✓ quantity at a quantity at a Compared to a competitive market, a monopsonist buys a If, at the current level of output, a monopolist determines that the elasticity of demand is -0.15, then the monopolist ✓price. ✓ price.
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A firm produces two kinds of products: Word and Excel. Both products are made by a monopolist. Four consumers are considering buying these products. The first consumer's willingness-to-pay (WTP) for Word is 10, and her WTP for Excel is 1. The second consumer's WTP for Word is 8, and her WTP for Excel is 5. The third consumer's WTP for Word is 5, and her WTP for Excel is 8. Lastly, the fourth consumer's WTP for Word is 1, and her WTP for Excel is 10. Assume that marginal costs for both products are zero. (1) price for each product? Also, compute the firm's profit under the optimal a la carte pricing. Suppose that both products need to be sold separately. What should be the optimal Now suppose that bundling is the only option. In other words, the monopolist only (2) sells two products together. What should be the optimal price for the bundle? Also, compute the firm's profit under the optimal bundling. (3) should be the optimal mixed bundling prices? Compute the firm's profit under the…
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