A firm with market power faces the demand function, q = 150 – 10P. The firm's marginal cost function is MC(q) = 2 + 0.1q. If the firm establishes a block-pricing structure with two prices, the lower price that the firm will use to maximize producer surplus is $____.

A firm with market power faces the demand function, q = 150 – 10P. The firm's marginal cost function is MC(q) = 2 + 0.1q. If the firm establishes a block-pricing structure with two prices, the lower price that the firm will use to maximize producer surplus is $____.

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter9: Monopoly

Section: Chapter Questions

Problem 1QFR

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A firm with market power faces the demand function, q = 150 – 10P. The firm's marginal cost function is

MC(q) = 2 + 0.1q. If the firm establishes a block-pricing structure with two prices, the lower price that the firm will use to maximize producer surplus is $____.

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