Question: A monopoly has a marginal cost of zero and faces

A monopoly has a marginal cost of zero and faces two groups of consumers. At first, the monopoly could not prevent resale, so it maximized its profit by charging everyone the same price, p = $ 5. No one from the first group chose to purchase. Now the monopoly can prevent resale, so it decides to price discriminate. Will total output expand? Why or why not? What happens to profit and consumer surplus?


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  • CreatedNovember 13, 2014
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