Consider a monopolist that has costs C = 250 + 30 Q + .1Q2 with two types of consumers: Q1 = 1000 – .5 P1 Q2 = 1500 – 2P2 a) How much will this firm offer to the market, what is the price charged to consumers, and what are the profits of the firm if this is a pure monopolist and treats consumers as one market? b) How much will this firm offer to the market, what is the price charged to consumers, and what are the profits of the firm if this is a perfect price discriminator? c) How much will this firm offer to the market, what is the price charged to consumers, and what are the profits of the firm if this is an imperfect price discriminator that can distinguish between type 1 and type 2 consumers?
Consider a monopolist that has costs C = 250 + 30 Q + .1Q2 with two types of consumers: Q1 = 1000 – .5 P1 Q2 = 1500 – 2P2 a) How much will this firm offer to the market, what is the price charged to consumers, and what are the profits of the firm if this is a pure monopolist and treats consumers as one market? b) How much will this firm offer to the market, what is the price charged to consumers, and what are the profits of the firm if this is a perfect price discriminator? c) How much will this firm offer to the market, what is the price charged to consumers, and what are the profits of the firm if this is an imperfect price discriminator that can distinguish between type 1 and type 2 consumers?
Chapter9: Monopoly
Section: Chapter Questions
Problem 13SQ
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Question
Consider a monopolist that has costs C = 250 + 30 Q + .1Q2 with two types of consumers:
Q1 = 1000 – .5 P1
Q2 = 1500 – 2P2
a) How much will this firm offer to the market, what is the price charged to consumers, and what are the profits of the firm if this is a pure monopolist and treats consumers as one market?
b) How much will this firm offer to the market, what is the price charged to consumers, and what are the profits of the firm if this is a perfect
c) How much will this firm offer to the market, what is the price charged to consumers, and what are the profits of the firm if this is an imperfect price discriminator that can distinguish between type 1 and type 2 consumers?
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