Let the Inverse Demand Curve for a Monopolist's Product Be

question 9

Multiple Choice

Let the inverse demand curve for a monopolist's product be P = 100 - 2Q and the marginal cost of production be constant at MC = 10. Which of the following is the optimal two-block tariff for the firm?

• A) P₁ = $70; Q₁ = 15; P₂ = $40; Q₂ = 30
• B) P₁ = $60; Q₁ = 20; P₂ = $30; Q₂ = 15
• C) P₁ = $80; Q₁ = 10; P₂ = $40; Q₂ = 15
• D) P₁ = $55; Q₁ = 22.5; P₂ = $55; Q₂ = 22.5

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