Question 4. Consider a monopolist facing a demand curve of the form D(p) : 100 2p where p is the unit price. Suppose the monOpolist
Question 4. Consider a monopolist facing a demand curve of the form D(p) : 100 2p where p is the unit price. Suppose the monOpolist has a constant marginal cost of production of $2 a unit. Bunter was asked to determine the price which would maximize consumer surplus. Here is his solution: Total surplus as a function of price is IP50100 2x)d33. The derivative of this with respect to p is (100 2p). This is maximized by making p as large as possible, i.e., p = 50. Is Bunter correct? If not, what is the error that Bunter has made
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