Question
The following table indicates the prices various buyers are willing to pay for a MINI Cooper car: Buyer Maximum Price Buyer A Buyer B Buyer
The following table indicates the prices various buyers are willing to pay for a MINI Cooper car: Buyer
Maximum Price
Buyer A Buyer B Buyer C
$50,000 40,000 30,000
Buyer D Buyer E Buyer F
Maximum Price
$20,000 10,000 0
The cost of producing the cars includes $40,000 of fixed costs and a constant marginal cost of $10,000.
(a) Graph below the demand, marginal revenue, and marginal cost curves.
(b) What is the profit-maximizing rate of output and price for a monopolist?
(c) How much profit does the monopolist make?
(d) If the monopolist can price discriminate, how many cars will he sell? (e) How much profit will he make?
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