Suppose a single firm has constant marginal cost and faced the demand curve
a.Illustrate in this graph how a monopolist who cannot price discriminate would price this good.What is the monopoly price and quantity?
b.Assuming no recurring fixed costs, how much profit does the monopolist make? How much consumer surplus is generated?
c.If the monopolist were able to first-degree price discriminate instead, how much would he produce? How much profit would he make? How much consumer surplus is generated?
d.Which outcome is more efficient and why?

Question

Suppose a single firm has constant marginal cost and faced the demand curve  
a.Illustrate in this graph how a monopolist who cannot price discriminate would price this good.What is the monopoly price and quantity?
b.Assuming no recurring fixed costs, how much profit does the monopolist make? How much consumer surplus is generated?
c.If the monopolist were able to first-degree price discriminate instead, how much would he produce? How much profit would he make? How much consumer surplus is generated?
d.Which outcome is more efficient and why?

Quizplus · Accepted Answer

The Answer of Suppose a single firm has constant marginal cost and faced the demand curve  
a.Illustrate in this graph how a monopolist who cannot price discriminate would price this good.What is the monopoly price and quantity?
b.Assuming no recurring fixed costs, how much profit does the monopolist make? How much consumer surplus is generated?
c.If the monopolist were able to first-degree price discriminate instead, how much would he produce? How much profit would he make? How much consumer surplus is generated?
d.Which outcome is more efficient and why?

Suppose a Single Firm Has Constant Marginal Cost and Faced