Roach Motors Has a Monopoly on Used Cars in Enigma

question 5

Multiple Choice

Roach Motors has a monopoly on used cars in Enigma, Ohio.By installing secret microphones in the showroom, the friendly salespersons at Roach are able to learn each customer's willingness to pay and can therefore practice first-degree price discrimination, extracting from each customer his entire consumer's surplus.The inverse demand function for cars in Enigma is P = 2,000 - 10Q.Roach Motors purchases its stock of used cars at an auction in Cleveland for $500 each.Roach motors will

• A)sell 150 cars for a total profit of $112,500.
• B)sell 75 cars for a total profit of $56,250.
• C)sell 150 cars at a price of $300 a car.
• D)sell 180 cars and make a total profit of $180,000.
• E)shut down since revenue will not cover variable costs.

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