Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

This Question: 20 pts 1 of 1 (0 complete) This Test: 20 pts possible Consider a second-degree price discriminating monopolist faces an inverse demand curve

image text in transcribed
This Question: 20 pts 1 of 1 (0 complete) This Test: 20 pts possible Consider a second-degree price discriminating monopolist faces an inverse demand curve given by P(Q) =277 - 3Q and has a cost function given by C(Q) = 2Q~ + 150. Suppose the monopolist uses two blocks in a declining-block pricing scheme. It charges a high price, P,, on the first Q, units (the first block) and a lower price, P2, on the next Q2 - Q, units. Calculate the profit-maximizing values for P,, P2, Q,, and Q2. Do not round intermediate values and submit your answers rounded to two digits. Quantity sold in the first block: . Total quantity sold: Prices charged. In the first block: . In the second block: Now suppose that the economist that had estimated the cost function receives new data that suggests that a constant marginal cost function is more appropriate for this monopolist. The cost function is better estimated as C(Q) = 150. How does this change the values Q, and Q2 relative to your answers in the previous part of the question? Do not round intermediate values and submit your answers rounded to two digits. Change in Q1 :_ Change in Q2: Enter your answer in each of the answer boxes.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Accounting IFRS

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield

3rd edition

1119372933, 978-1119372936

Students also viewed these Economics questions