Consider a product with 5 consumers willing to pay $6, $5, $4, $3, $2, respectively, which has constant marginal cost of $2.50/unit. If you are a monopolist and can identify a group of consumers willing to pay less than the standard monopoly price but more than marginal cost for the product, you can maximize profits by offering prices of $5 to high-value consumers and A. None of these, as only one price of $5 should be offered to maximize profits B. $2 to low-value customers C. $4 to low-value customers D. $3 to low-value customers
Consider a product with 5 consumers willing to pay $6, $5, $4, $3, $2, respectively, which has constant marginal cost of $2.50/unit. If you are a monopolist and can identify a group of consumers willing to pay less than the standard monopoly price but more than marginal cost for the product, you can maximize profits by offering prices of $5 to high-value consumers and A. None of these, as only one price of $5 should be offered to maximize profits B. $2 to low-value customers C. $4 to low-value customers D. $3 to low-value customers
Chapter14: Monopoly
Section: Chapter Questions
Problem 14.1P
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Consider a product with 5 consumers willing to pay $6, $5, $4, $3, $2, respectively, which has constant marginal cost of $2.50/unit. If you are a monopolist and can identify a group of consumers willing to pay less than the standard
A. None of these, as only one price of $5 should be offered to maximize profits
B. $2 to low-value customers
C. $4 to low-value customers
D. $3 to low-value customers
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