The graph to the right represents the linear demand curve for each identical consumer in a...

 

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The graph to the right represents the linear demand curve for each identical consumer in a market that a monopoly faces. Using nonlinear price discrimination analysis, suppose that the monopoly can make consumers a take-it-or-leave-it offer. P.$ per unit 100- 90- Suppose the monopoly sets a price, p", and a minimum quantity, Q*, that a consumer must pay to be able to purchase any units at all. What price and minimum quantity should it set to achieve the same outcome as it would if it perfectly price discriminated? 80- 70- The price should be $ 60 and the minimum quantity is 60. 60- Now suppose the monopolist charges a price of $90 for the first 30 units and a price of $30 for all subsequent units, but requires that a consumer must buy at least 30 units to be allowed to buy any. Compare this outcome to the one in part a and to the perfectly price-discriminating 50- 40- outcome. 30 MC A. Consumers will purchase 60 units, and the monopoly will extract all the consumer surplus. 20- 10- B. Consumers will buy 31 units, and consumer surplus will be positive but less than $30. MR D C. Consumers will buy 45 units, and the monopoly will extract half of the consumer surplus. 10 20 30 40 so 60 70 80 Q, Units per day 90 100 D. At a price of $90, the quantity demanded is zero; thus, total demand will be zero. The graph to the right represents the linear demand curve for each identical consumer in a market that a monopoly faces. Using nonlinear price discrimination analysis, suppose that the monopoly can make consumers a take-it-or-leave-it offer. P.$ per unit 100- 90- Suppose the monopoly sets a price, p", and a minimum quantity, Q*, that a consumer must pay to be able to purchase any units at all. What price and minimum quantity should it set to achieve the same outcome as it would if it perfectly price discriminated? 80- 70- The price should be $ 60 and the minimum quantity is 60. 60- Now suppose the monopolist charges a price of $90 for the first 30 units and a price of $30 for all subsequent units, but requires that a consumer must buy at least 30 units to be allowed to buy any. Compare this outcome to the one in part a and to the perfectly price-discriminating 50- 40- outcome. 30 MC A. Consumers will purchase 60 units, and the monopoly will extract all the consumer surplus. 20- 10- B. Consumers will buy 31 units, and consumer surplus will be positive but less than $30. MR D C. Consumers will buy 45 units, and the monopoly will extract half of the consumer surplus. 10 20 30 40 so 60 70 80 Q, Units per day 90 100 D. At a price of $90, the quantity demanded is zero; thus, total demand will be zero.

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Because for initial 30units consumer will lose ... View the full answer