Suppose Company X practices first-degree price discrimination and is faced with the following demand and marginal cost functions: 

Q = 6000-100P 

P = 65 – 0.01Q 

MC = 6.68 + 0.0068Q 

(a) Compute for Company X’s consumer surplus and producer surplus. 

(b) Does the social welfare improve because of Company X’s strategy of first-degree price discriminating? Explain intuitively and show graphically.

Answer rating: 100% (QA)

a Company Xs consumer surplus is given by the integral of the demand function which is equal to CS 60002 65 001 6000 1882500 Company Xs producer surpl... View the full answer