QUESTION 2 Consider the following market with a single firm. Demand: P = 180 - 2 Q Marginal Cost: 57 + Q PART A. If the firm is a single price monopolist, it will produce a quantity QM = The equilibrium price will be PM =_ PART B. If this firm were a price taker and P = MC, it would produce a quantity Q = 41 and price P 98 Given this, the monopoly deadweight loss (the money left on the table) is dollars. PART C. Now suppose the firm is a two-price monopolist, separating its customers along the lines of their reservation prices, with a high price retail market and a lower discount price market. The price and quantity in the retail market is the same as what you found in Part A. All remaining customers are potential buyers in the discount market. The quantity that maximizes the monopolist's profits in the discount market is Qp = and the equilibrium price in the discount market is Pp = PART D. As a result of the monopolist offering a discount price, the monopoly deadweight loss is reduced to
QUESTION 2 Consider the following market with a single firm. Demand: P = 180 - 2 Q Marginal Cost: 57 + Q PART A. If the firm is a single price monopolist, it will produce a quantity QM = The equilibrium price will be PM =_ PART B. If this firm were a price taker and P = MC, it would produce a quantity Q = 41 and price P 98 Given this, the monopoly deadweight loss (the money left on the table) is dollars. PART C. Now suppose the firm is a two-price monopolist, separating its customers along the lines of their reservation prices, with a high price retail market and a lower discount price market. The price and quantity in the retail market is the same as what you found in Part A. All remaining customers are potential buyers in the discount market. The quantity that maximizes the monopolist's profits in the discount market is Qp = and the equilibrium price in the discount market is Pp = PART D. As a result of the monopolist offering a discount price, the monopoly deadweight loss is reduced to
Microeconomics A Contemporary Intro
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ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter9: Monopoly
Section: Chapter Questions
Problem 1QFR
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Transcribed Image Text:QUESTION 2
Consider the following market with a single firm.
Demand: P = 180 - 2 Q
Marginal Cost: 57 + Q
PART A. If the firm is a single price monopolist, it will produce a quantity QM =
The equilibrium price will be PM =
PART B. If this firm were a price taker and P = MC, it would produce a quantity Q = 41 and price P= 98
Given this, the monopoly deadweight loss (the money left on the table) is
dollars.
PART C. Now suppose the firm is a two-price monopolist, separating its customers along the lines of their
reservation prices, with a high price retail market and a lower discount price market. The price and quantity
in the retail market is the same as what you found in Part A. All remaining customers are potential buyers in
the discount market.
The quantity that maximizes the monopolist's profits in the discount market is Qp = -
and the equilibrium price in the discount market is PD =
PART D. As a result of the monopolist offering a discount price, the monopoly deadweight loss is reduced to
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