Question
Consider the market for widgets. There are 10 consumers, each of whom has demand curve Qi = 36 - 0.1P. Widgets are produced by a
Consider the market for widgets. There are 10 consumers, each of whom has demand curve Qi = 36 - 0.1P. Widgets are produced by a monopolist with cost function C(Q) = Q2. 4a. What is the aggregate demand curve in this market?
4b. Suppose that widgets are produced by a monopolist. If the monopolist sells all units for the same price and maximizes profit, what price will the monopolist charge? How many widgets will be offered for sale?
4b. Suppose, instead, that the monopolist sells widgets using a two-part tariff. Find the use price, p, and fixed fee, F, charged to each user that maximizes the monopolist's profit.
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