A monopolist faces a demand curve, Q=100-2P and has a constant marginal cost of 10. It has no fixed costs. a. If the monopolist can only charge a single price, it should charge P*= v and produce Q*= v units. b. If the monopolist can charge a separate price for any units sold beyond Q*, then the price of these additional units will lead to additional profit if it is any price in the range of v. A monopolist that charges a separate price for additional units is practicing v price discrimination.
A monopolist faces a demand curve, Q=100-2P and has a constant marginal cost of 10. It has no fixed costs. a. If the monopolist can only charge a single price, it should charge P*= v and produce Q*= v units. b. If the monopolist can charge a separate price for any units sold beyond Q*, then the price of these additional units will lead to additional profit if it is any price in the range of v. A monopolist that charges a separate price for additional units is practicing v price discrimination.
Chapter14: Monopoly
Section: Chapter Questions
Problem 14.1P
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