Fernando has a monopoly on sales of pizzas in the small town of North Key Largo, Florida. Use the following information on the demand for Fernando's pizzas to answer the questions.
Price Quantity Demanded
$30...............................................0
25.................................................1
20.................................................2
15.................................................3
10.................................................4
5...................................................5
0...................................................6
a. If Fernando can produce pizzas at a constant cost of $5 per pizza, how many pizzas does he produce, what price does he charge, and how much profit does he make?
b. If Fernando is able to engage in perfect price discrimination, what is his total revenue for 3 units? What is the marginal revenue of the third unit?
c. If Fernando is able to engage in perfect price discrimination, how many pizzas does he produce, and how much profit does he make?
d. Draw a graph showing producer surplus, consumer surplus, and deadweight loss if Fernando does not price discriminate. Draw a second graph showing producer surplus, consumer surplus, and deadweight loss if Fernando practices perfect price discrimination.