Question
Suppose the monopolist in the previous problem can now price discriminate between type A and type B consumers using athird degree price discrimination scheme (group
Suppose the monopolist in the previous problem can now price discriminate between type A and type B consumers using athird degree price discrimination scheme (group pricing)
a- Suppose that this monopolist has a constant marginal cost of production ofMC(q) = 50. Solve for the equilibrium price charged to each type of consumer and the equilibrium quantity sold to each type of consumer. Calculate total monopolist profits. How does this compare to the profit that the monopoly earned when it could not price discriminate? Is price discrimination welfare improving in this case?
b-Suppose that this monopolist has an increasing marginal cost of production ofMC(q) = 20 +Q. Solve for2
the equilibrium price charged to each type of consumer and the equilibrium quantity sold to each type of consumer. Calculate total monopolist profits.
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