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The market for sterilized cotton swabs can be described with inverse market demand, P subscript d equals 50 minus 1 over 10 Q subscript d
The market for sterilized cotton swabs can be described with inverse market demand, P subscript d equals 50 minus 1 over 10 Q subscript d comma Where quantities and prices are per pack of swabs. This market is currently supplied by one firm with cost function, C left parenthesis q right parenthesis equals 6000 plus 1 fifth q. The monopolist is determining whether to charge a single (profit-maximizing) price, or they could second-degree price discriminate: set intial price at $30, and then later lower the price to $10. Doing so would be double marginal cost and increase fixed cost by $1,600; or: stack C left parenthesis q right parenthesis with tilde on top equals 7600 plus 2 over 5 q. Should the monopolist 2nd degree price discriminate
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