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(Perfect Price Discrimination) Why is the perfectly dis- criminating monopolist’s marginal revenue curve identical to the demand curve it faces?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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10. (Perfect Price Discrimination) Why is the perfectly dis- criminating monopolist’s marginal revenue curve identical to the demand curve it faces?

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2. (Market segment) In a monopoly market, the producer has a cost function of: C = 5+3q, there are two different types of consumers, they have different demand functions: p1 = 15-qı, P2=25-2y2.| a. If the monopolist can conduct the third-degree price discrimination, i.e. he can charge different price to different types of consumers, what is the price he will charge on each market? What is the quantity sold on each market? What is the total profit? b. If the monopolist cannot conduct third degree price discrimination, i.e. he cannot distinguish between the consumers but decide to charge a single price, what is the price he will charge? What is the quantity sold? What is his profit in this case?
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