A monopolist is deciding to practice 2nd degree price discrimination according to quantity consumed, i.e. pricing...

 

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A monopolist is deciding to practice 2nd degree price discrimination according to quantity consumed, i.e. pricing in blocks. Without price discrimination he charges 120. Price elasticity of demand he faces is equal to -1,5. Marginal cost is MC Q+ 20. Fixed costs are 0. (a) What are price, output, and profits if there is no price discrimination. Also define the demand function (assume it is linear) (b) Now monopolist uses 2nd degree price discrimination. Calculate the size and price for each block if 1st block is 10. What the total quantity of blocks? Use the demand function from (a). Hint: use Stackelberg rule. Also s , .5 (c) What are the profit and consumer's surplus? Show it on the graph. (d) Suppose the total quantity of blocks is that of (b), but the size and price for each block is not defined. What are the optimal size and price for each block. What is profit? A monopolist is deciding to practice 2nd degree price discrimination according to quantity consumed, i.e. pricing in blocks. Without price discrimination he charges 120. Price elasticity of demand he faces is equal to -1,5. Marginal cost is MC Q+ 20. Fixed costs are 0. (a) What are price, output, and profits if there is no price discrimination. Also define the demand function (assume it is linear) (b) Now monopolist uses 2nd degree price discrimination. Calculate the size and price for each block if 1st block is 10. What the total quantity of blocks? Use the demand function from (a). Hint: use Stackelberg rule. Also s , .5 (c) What are the profit and consumer's surplus? Show it on the graph. (d) Suppose the total quantity of blocks is that of (b), but the size and price for each block is not defined. What are the optimal size and price for each block. What is profit?