Question
Imagine a firm called Bapple that is the monopoly in the market for smartwatches, with cost-function C(Q) = 8Q2 . Imagine the inverse demand function
Imagine a firm called Bapple that is the monopoly in the market for smartwatches, with cost-function C(Q) = 8Q2 . Imagine the inverse demand function for smartwatches is p(Q) = 800 2Q.
1.1 A. What are equilibrium price and equilibrium quantity with a single price?
1.2 B. Show the equilibrium price and equilibrium quantity graphically. Include the inverse demand curve, firm's marginal revenue curve, and firm's marginal cost curve.
1.3 C. What are consumer surplus, producer surplus, and deadweight loss at this equilibrium? Now assume that Bapple is able to perfectly price discriminate in the market for smartwatches.
1.4 D. What three conditions must be true for this perfect price discrimination to be possible?
1.5 E. What are the equilibrium prices and equilibrium quantity with perfect price discrimination?
1.6 F. What are consumer surplus, producer surplus, and deadweight loss at the perfect price discrimination equilibrium? How do these compare to the single price equilibrium?
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