3.2 A monopoly has a marginal cost of zero and faces two groups of consumers. At first,...

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3.2 A monopoly has a marginal cost of zero and faces two groups of consumers. At first, the monopoly could not prevent resale, so it maximized its profit by charging everyone the same price, p = $5. No one from the first group chose to purchase. Now the monopoly can prevent resale, so it decides to price discriminate. Will total output necessarily expand? Why or why not? What happens to profit and consumer surplus?

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Microeconomics

ISBN: 9780133456912

7th Edition

Authors: Jeffrey M. Perloff

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