Assume a Monopolist Can Prevent Resale of Its Product and It

question 45

Essay

Assume a monopolist can prevent resale of its product and it has complete information about each one of its customers. Even though each customer has a different demand curve, the seller can identify each customer's demand curve before a purchase takes place. It faces the inverse market demand of P = 160 - 10Q with marginal cost of MC = 10 + 5Q. Identify the type of price discrimination the monopolist should employ and complete this table:

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Definitions:

Equilibrium Price

The market price at which the quantity of goods supplied is equal to the quantity of goods demanded.

Close Substitute

A good or service that can easily replace another, fulfilling the same need or want, typically affecting consumer choice.

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers is equal to the quantity supplied by producers, leading to market equilibrium.

Equilibrium Quantity

The quantity of goods or services supplied and the quantity demanded at which their price is stable, and there is no tendency for it to change unless external factors intervene.