Table 15-4
A monopolist faces the following demand curve:

-Refer to Table 15-4.Consider that the monopolist has fixed costs of $1000 and has a constant marginal cost of $3 per unit.If the monopolist were able to perfectly price discriminate,how many units would it sell
A)400
B)500
C)700
D)800

Question

Table 15-4
A monopolist faces the following demand curve:

-Refer to Table 15-4.Consider that the monopolist has fixed costs of $1000 and has a constant marginal cost of $3 per unit.If the monopolist were able to perfectly price discriminate,how many units would it sell
A)400 
B)500 
C)700 
D)800

Quizplus · Accepted Answer

A perfectly price-discriminating monopolist will sell units up to the point where the price equals the marginal cost. Since the marginal cost is constant at $3, the monopolist will sell all units for which consumers are willing to pay at least $3. Assuming the demand curve allows for 800 units to be sold at or above $3, the monopolist would sell 800 units.

Table 15-4 A Monopolist Faces the Following Demand Curve