Managerial Economics: A Problem Solving Approach
5th Edition
ISBN: 9781337106665
Author: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher: Cengage Learning
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Chapter 23, Problem 23.5IP
To determine
The possibility of
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Market demand for the nuclear substance pluranium is given below, along with the TR for the given
demand schedule. Pluranium is supplied to the world market by a monopolist. Suppose that the
marginal cost of supplying an extra megatonne of pluranium is $20 and the business has FC=$60.
Suppose that the monopolist can 3rd degree price discriminate and segregate market demand
into two global regions - North world and South world - as follows:
North world
Price ($ per megaton) Quantity (megatons)
80
70
60
50
40
30
20
10
0
0
1
2
3
3
3
3
3
3
Price ($ per megaton)
80
70
60
50
40
30
20
South world
10
0
Quantity (megatons)
0
0
0
0
1
2
3
4
5
Given that they segregate the market, what is the profit that the monopolist makes?
Market demand for the nuclear substance pluranium is given below, along with the TR for the given
demand schedule. Pluranium is supplied to the world market by a monopolist. Suppose that the
marginal cost of supplying an extra megatonne of pluranium is $20 and the business has FC=$60.
Suppose that the monopolist can 3rd degree price discriminate and segregate market demand
into two global regions - North world and South world - as follows:
North world
Price ($ per megaton)
80
70
60
50
40
30
20
10
0
Quantity (megatons)
quantity would be
0
1
2
3
3
3
3
3
3
South world
Price ($ per megaton) Quantity (megatons)
80
70
60
50
40
30
20
10
0
If they were only to service South World, then the price would be
0
0
0
0
1
2
3
4
5
and the
Exercise 4.2
"With respect to the monopoly equilibrium without price discrimination, first-degree price discrimination increases the profit of the enterprise at the expense of reducing social welfare." Do you agree with this statement? Reason your answer and represent graphically.
Chapter 23 Solutions
Managerial Economics: A Problem Solving Approach
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