Suppose that a price discriminating monopolist has segregated its market into tw
ID: 1243357 • Letter: S
Question
Suppose that a price discriminating monopolist has segregated its market into two groups of buyers shown in the table below. Calculate the missing total-revenue and marginal-revenue amounts for Group 1. GROUP 1 GROUP 2 Price Qty Demanded TR MR Price QD TR MR $115 0 0 - - - - - 100 1 100 100 - - - - 83 2 166 66 - - - - 71 3 213 47 71 0 0 - 63 4 252 39 63 1 63 63 55 5 275 23 55 2 110 47 48 6 288 13 48 3 144 34 42 7 294 6 42 4 168 24 37 8 296 2 37 5 185 17 33 9 297 1 33 6 198 13 29 10 290 -7 29 7 203 5 Assume that MC is $13 in both markets and MC = ATC at all output levels. What price will the firm charge in each market? Group 1: _______ units at a price of $ _______ Group 2: _______ units at a price of $ _______ Based solely on these two prices, which market has the higher price elasticity of demand? The first or the second What will be this monopolist's total economic profit? $________Explanation / Answer
Price
Quantity demanded
Total revenue
Marginal revenue
$71
0
$0
$63
63
1
63
47
55
2
110
34
48
3
144
24
42
4
168
17
37
5
185
13
33
6
198
5
29
7
203
Price
Quantity demanded
Total revenue
Marginal revenue
$71
0
$0
$63
63
1
63
47
55
2
110
34
48
3
144
24
42
4
168
17
37
5
185
13
33
6
198
5
29
7
203
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