Suppose That the Demand for a Monopolist's Product Is Estimated

question 36

Multiple Choice

Suppose that the demand for a monopolist's product is estimated to be Q^d = 100 − 2P and its total costs are C(Q) = 10Q.Under first-degree price discrimination,the optimal price(s) ,number of total units exchanged,profit,and consumer surplus are:

• A) P = $30; Q = 40,  = $800; CS = $400.
• B) 10  P  100; Q = 80;  = $1,600; CS = $1,600.
• C) 10  P  50; Q = 80,  = $1,600; CS = $0.
• D) P = $30; Q = 40,  = $600; CS = $0.

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Definitions:

American Consumers

Individuals or households in the United States engaging in the consumption of goods and services.

Natural Monopoly

A market structure where a single firm can supply a good or service to an entire market at a lower cost than could two or more firms due to economies of scale.

Economic Power

The capacity of an entity, whether a nation, corporation, or individual, to influence or control economic activities and outcomes.

CEO Compensation

The total remuneration package, including salary, bonuses, and stock options, offered to the chief executive officer of a corporation.