Suppose a monopolist producing Q units of output faces the demand curve P = 20 - Q.

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Suppose a monopolist producing Q units of output faces the demand curve P = 20 - Q. Its total cost when producing Q units of output is TC = F + Q2, where F is a fixed cost. The marginal cost is MC = 2Q.
a) For what values of F can a profit-maximizing firm charging a uniform price earn at least zero economic profit?
b) For what values of F can a profit-maximizing firm engaging in perfect first-degree price discrimination earn at least zero economic profit?
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Microeconomics

ISBN: 978-0073375854

2nd edition

Authors: Douglas Bernheim, Michael Whinston

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