Question

In: Economics

Suppose the firm knows that, there are three types of buyers: ?? = 100 − 4?,??...

Suppose the firm knows that, there are three types of buyers: ?? = 100 − 4?,?? = 400 − 6?, and ?? = 300 − 10?. The firm’s ATC=MC=5.

  1. Suppose the firm operates as a single price monopoly, what will be the market price, market quantity, and profit?

  2. What will be consumer surplus, producer surplus, and deadweight loss? Draw a graph!

  3. Under which conditions can this firm use segmented price discrimination?

  4. Suppose that the firm conditions from c) hold, what should the firm charge in each

    market? What is output in each market? What is total market quantity? What is the

    firm’s profit?

  5. Does segmented price discrimination of the market improve efficency? Why?

Solutions

Expert Solution

Rahul Sunny answered 6 months ago
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