Use the following information for problems 15-17: Consider a market with two individuals, A and B, whose demand curves are, respectively, QA 100 - Р, Qв served by a monopoly with total cost function TC = 170 – 2P. Assume that income elasticity of demand is zero. This market is 30Q. 15. If the monopoly cannot price discriminate, what would be its price, quantity, and profit? 16. If the monopoly can set different prices for each individual but has to charge the same price for different quantities and units purchased by the same individual (i.e., the monopoly cannot engage in either first or second degree price discrimination), what would be the prices for each individual, quantities they purchase, and the monopoly's profit? 17. Suppose now the monopoly could use a two-part tariff with a uniform entry fee and a uniform price for both individuals after they have paid the fee. If the monopoly keeps its price at the level you found in problem 15 above, what entry fee would maximize its profit and what this profit would be?
Use the following information for problems 15-17: Consider a market with two individuals, A and B, whose demand curves are, respectively, QA 100 - Р, Qв served by a monopoly with total cost function TC = 170 – 2P. Assume that income elasticity of demand is zero. This market is 30Q. 15. If the monopoly cannot price discriminate, what would be its price, quantity, and profit? 16. If the monopoly can set different prices for each individual but has to charge the same price for different quantities and units purchased by the same individual (i.e., the monopoly cannot engage in either first or second degree price discrimination), what would be the prices for each individual, quantities they purchase, and the monopoly's profit? 17. Suppose now the monopoly could use a two-part tariff with a uniform entry fee and a uniform price for both individuals after they have paid the fee. If the monopoly keeps its price at the level you found in problem 15 above, what entry fee would maximize its profit and what this profit would be?
Chapter14: Monopoly
Section: Chapter Questions
Problem 14.9P
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Transcribed Image Text:Use the following information for problems 15-17:
Consider a market with two individuals, A and B, whose demand curves are, respectively, QA
100 – P, QB = 170 – 2P. Assume that income elasticity of demand is zero. This market is
served by a monopoly with total cost function TC =
30Q.
15. If the monopoly cannot price discriminate, what would be its price, quantity, and profit?
16. If the monopoly can set different prices for each individual but has to charge the same price
for different quantities and units purchased by the same individual (i.e., the monopoly cannot
engage in either first or second degree price discrimination), what would be the prices for each
individual, quantities they purchase, and the monopoly's profit?
17. Suppose now the monopoly could use a two-part tariff with a uniform entry fee and a
uniform price for both individuals after they have paid the fee. If the monopoly keeps its price
at the level you found in problem 15 above, what entry fee would maximize its profit and what
this profit would be?
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