Suzanne Is the Monopoly Seller of a Highly Addictive Consumer

question 1

Multiple Choice

Suzanne is the monopoly seller of a highly addictive consumer product.Her marginal cost is $2 per unit and she has no other costs.Suzanne knows that new clients have an individual demand curve of P = 10 - q and that previous clients (or repeated customers) have a demand curve of P = 18 - q.Suzanne knows exactly who each client is - that is, whether they are a new client or a previous client.What is Suzanne's profit-maximizing strategy?

• A)Sell a bundle of 10 units to each new client for a price of $100; sell a bundle of 18 units to previous clients at a price of $324.
• B)Sell a bundle of 8 units to each new client for a price of $48; sell a bundle of 16 units to previous clients at a price of $160.
• C)Sell a bundle of 8 units to each new client for a price of $64; sell a bundle of 16 units to previous clients at a price of $128.
• D)Sell a bundle of 4 units to each new client for a price of $32; sell a bundle of 6 units to previous clients at a price of $40.
• E)None of the above.

---

Definitions:

Undervaluation

The assessment of something as being less than its intrinsic or market value, often leading to unjust or inequitable situations.

Programs of Study

Curriculums or sets of courses offered by educational institutions aimed at achieving a specific degree or certification.

Rescorla's Theory

A theory of classical conditioning that emphasizes the importance of cognitive processes and the predictability of the unconditioned stimulus for effective learning.

CS

An abbreviation for Conditioned Stimulus, a term used in classical conditioning to denote a previously neutral stimulus that, after being paired with an unconditioned stimulus, evokes a conditioned response.