"Will a monopolist's total revenue be larger with second-degree price discrimination when the batches on which it charges a uniform price are larger or smaller? Why?"© BrainMass Inc. brainmass.com October 24, 2018, 10:41 pm ad1c9bdddf
In the literal sense, a monopolist has the freedom to set whatever price it wants because it is the only producer/ manufacturer/ provider of the good or service in the market. Since there is no ...
A monopolist's revenue with second degree price discrimination is explored.
Second-Degree Price Discrimination Benefits
Suppose that individual demand for a product is given by QD = 1000 - 5P. Marginal revenue is MR = 200 - 0.4Q, and marginal cost is constant at $20. There are no fixed costs.
a. The firm is considering a quantity discount. The first 400 units can be purchased at a price of $120, and further units can be purchased at a price of $80. How many units will the consumer buy in total?
b. Show that this second-degree price-discrimination scheme is more profitable than a single monopoly price.View Full Posting Details