A monopolist is selling products to a competitive buyer with the inverse demand P=120-20. The monopolist...

 

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A monopolist is selling products to a competitive buyer with the inverse demand P=120-20. The monopolist bears the total cost c(Q)=Q²/2 when producing Q units. (A) If the monopolist sells with the declining-block prices so that the buyer pays P for each unit of the quantity under Q units and P₂ ≤P for each additional unit over Q₁. Design the optimal P₁, P₂ and Q for the monopolist. (B) Find the amount of deadweight loss when the monopolist sells with the declining-block prices in question (A). A monopolist is selling products to a competitive buyer with the inverse demand P=120-20. The monopolist bears the total cost c(Q)=Q²/2 when producing Q units. (A) If the monopolist sells with the declining-block prices so that the buyer pays P for each unit of the quantity under Q units and P₂ ≤P for each additional unit over Q₁. Design the optimal P₁, P₂ and Q for the monopolist. (B) Find the amount of deadweight loss when the monopolist sells with the declining-block prices in question (A).

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A To find the optimal price and quantity for the monopolist selling with decliningblock prices we need to maximize the monopolists profit The monopoli... View the full answer