Suppose a monopolist faces an inverse demand function P=100-1/2Q, and the monopolist has a fixed marginal cost of $20. How much more would the monopolist make from perfect price discrimination compared to simply producing where marginal revenue equals marginal cost?

  1. 👍
  2. 👎
  3. 👁
  1. Drawing a picture would help.

    A normal monopolist would set MC=MR. Under this example, optimal Q=80, thus P=60. Total revenue is 80*60=4800. Total cost (represented by the area under MC between 0 and 80) is 80*20=1600. So, profit = 3200.

    For the perfect price discriminator, total profit would be the area under demand, and above MC. In this example it is a simple triangle. Height=100-20=80, width =160. So area=profit=.5*80*160 = 6400

    1. 👍
    2. 👎
  2. l Accept

    1. 👍
    2. 👎

Respond to this Question

First Name

Your Response

Similar Questions

  1. Economics

    A monopoly firm faces a demand curve given by the following equation: P = $500 − 10Q, where Q equals quantity sold per day. Its marginal cost curve is MC = $100 per day. Assume that the firm faces no fixed cost. You may wish to

  2. economics

    Given demand curve of the monopolist :Q=30-0.3P,& given the cost function C=2Q2+20Q+10, a)find the profit maximizing level of output &price b)determine the max possible profit. c)check for the 2nd order condition.

  3. economics

    1) A monopolist is deciding how to allocate output between two markets that are separated geographically. Demands for the two markets are P1 = 15 –Q1 and P2 = 25 – 2Q2. The monopolist’s TC is C = 5 + 3(Q1+Q2). What are

  4. Economics/Algebra

    A monopolist has a constant marginal and average cost of $10 and faces a demand curve of QD = 100 - 10P. Marginal revenue is given by MR=100-.20P. a. Calculate the monopolist's profit maximizing quantity, price, and profit. b. Now

  1. economics

    demand function of a monopolist is given as Q=50 - 0.5p while the cost function is given as C= 50 + 40q. calculate equilibrium quantity and profit maximizing output.

  2. Economics

    3. Suppose the Clean Springs Water Company has a monopoly on bottled water sales in California. If the price of tap water increases, what is the change in Clean Springs' profit-maximizing level of output, price, and profit?

  3. Economics

    50. In both monopolistic competition and non-price-discriminating monopoly, isn't the marginal revenue curve lies below the demand curve? 51. A monopolistically competitive firm is producing an output level where marginal revenue

  4. To: Economyst - Can you please help me?

    The demand curve for a monopolist is Qd = 500 - P and the marginal revenue function is MR = 500 - 2P. The monopoloist has a constant marginal and average total cost of $50 per unit. a. Find the monopolist's profit maximizing

  1. Economics

    got this from my teacher, A monopolist faces a demand curve given by the following equation: P = $500 − 10Q, where Q equals quantity sold per day. Its marginal cost curve is MC = $100 per day. Assume that the firm faces no fixed

  2. calculus

    14. The demand function for a monopolist’s product is 𝑝=√500−𝑞. If the monopolist produces at least 100 units, but no more than 200 units, how many units should be produced to maximize total revenue,𝑅=𝑝𝑞?

  3. economics

    A monopoly firm is different from a competitive firm in that A. there are many substitutes for a monopolist's product while there are no substitutes for a competitive firm's product B. a monopolist's demand curve is perfectly

  4. Economics

    Willy's widgets, a monopoly, faces the following demand schedule (sales of widgets per month): Price $20 30 40 50 60 70 80 90 100 Quantity 40 35 30 25 20 15 10 5 0 Calculate marginal revenue over each interval in the schedule (for

You can view more similar questions or ask a new question.