Question

The following table indicates the prices various buyers are willing to pay for a Miata sports car:

Buyer A Maximum price $50,000
Buyer B Maximum price $40,000
Buyer C Maximum price $30,000
Buyer D Maximum price $20,000
Buyer E Maximum price $10,000

The cost of producing the cars includes $50,000 of fixed costs and a constant marginal cost of $10,000. With a Quantity between 0 and 6 cars per period.

a) graph the demand, marginal revenue, and marginal cost curves.

b) What is the profit-maximizing rate of output and price for the monopolist? How much profit does the monopolist make?

Output____________
Price_____________
Profit____________

c) If the monopolist can price-discriminate, how many cars will he sell?

d) How much profit will he make?

Answer 1

First, derive a marginal revenue curve (like you did in your previous post.) So,
P=50000, Q=1, TR=50000, MR=50000
P=40000, Q=2, TR=80000, MR=30000
P=30000, Q=3, TR=90000, MR=10000
and so on.

b) he makes 3 cars, charges 30,000 each, and makes 10,000 profit.

c) He makes 5 cars, charges the maximum each buyer will pay TR=150,000 ...

Answer 2

fdc