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Exercise 1: Perfect Price Discrimination Consider a market with aggregate demand 250 - 5p if p 50 and a single firm with cost function if
Exercise 1: Perfect Price Discrimination Consider a market with aggregate demand 250 - 5p if p 50 and a single firm with cost function if q = 0 c(q) = q- + 10q + 20 if q >0 where q is the firm's total output. The firm is able to first-degree (perfectly) price discriminate. 1. How many units of the good does the monopolist sell? Compute the monopolist's revenue. 2. What are the resulting consumers' surplus (CS), producer's surplus (PS), and deadweight loss (DWL)? Explain
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