Question
An organization has an inverse demand function for monthly consumption of Qd = 200 - 2P and a marginal and average cost of $10. Calculate
An organization has an inverse demand function for monthly consumption of Qd = 200 - 2P and a marginal and average cost of $10. Calculate producer surplus, consumer surplus, total surplus, economic profit, and deadweight loss in the following scenarios. Show your work for all calculations.
1. A monopolist under perfect price discrimination
2.A monopolist under single pricing.
3. A monopolist that can divide the market into two markets: those that value the product at or above $105 and those that value it less than $105.
4. Suppose that the company is regulated and required to provide minimum product quantities at marginal cost. If it helps, think of the demand curve as representing one consumer. The customer is charged marginal cost for the first 20 units used; the next 40 units at a price of $50; and the fee for any consumption above 60 is $130. How does the profitability compare to your answers in a through c?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started