Use the graph below to answer the remaining questions: $100 MC ATC $90 $62 $25 f

Question

Use the graph below to answer the remaining questions: $100 MC ATC $90 $62 $25 f--r 100 200 350R 50q 900 a 530 c) Calculate the firm's profit if it is a single-price monopoly. Profit = $ d) Calculate the firm's proft i it is a perlect price discriminationg monopolist: Proft-s e) Calculate the firm's profit if it price discriminates as follows: Sell the first 200 units at a high price and the rest of the units at a low price: (hint, what is the maximum number of units they are willing to sel? Price is delermined from the demand curve). Profit Calculate the firm's proit if it price discriminates as follows: Sell the irst 100 units at a high price, the next 100 units at a medium price, and the rest of the units at a low price: (hint, what is the maximum number of units they are willing to seli? Price is determined from the demand curve). Profit-s

Explanation / Answer

c) Monopolist produces when MC=MR. So profit is TR-TC =(62-52)*350 = $3500.

d) Perfect price discriminating monopolist produces when P=MC. Thus profit is (50-47)*500 = $1500.

e) There will be 0 profit for the first 200 units. For the next 300 units there will profit of (50-47)*500 = $1500.

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