A Firm with Market Power Faces the Demand Function Q

question 79

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 lower priced block is $____.

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

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Definitions:

Third Quartile

The value below which 75% of the observations in a dataset fall, also known as the upper quartile.

Potential Outlier

A data point that differs significantly from other observations, possibly indicating a deviation or anomaly in the dataset.

Measurements

The collection of quantitative data or observations that describe and quantify attributes or characteristics.

Outliers

Observations in a dataset that are significantly different from the majority of the data, potentially indicating measurement error or a population variance.