A Firm with Market Power Faces the Demand Function Q

question 125

Multiple Choice

A firm with market power faces the demand function q = 1,000 - 100P. The firm's marginal cost function is MC(q) = 2 + 0.08q. If the firm establishes a block-pricing structure to maximize producer surplus, the optimal price for the higher priced block is $____.

• A) 3.92
• B) 3.79
• C) 3.83
• D) 3.61

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