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Suppose that the annual market demand for Bleebs is given by Q=3750-75P The average and marginal...

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Economics

Suppose that the annual market demand for Bleebs is given byQ=3750-75P The average and marginal costs of producing Bleebs are$10/bleeb.

A) If the firm acts as a single-price monopoly, what are themonopoly quantity, price, and profit?

B) Suppose that there are three hundred identical customers inthis market. What is the best two-part tariff that the monopolistcan use? If the monopolist implements the two-part tariff, how muchprofit will it make?

C) It turns out that the monopolist was wrong about the makeupof the customers. At any price, 1/3 of the customers buy twice asmuch as the other two thirds. If the monopolist implements thetwo-part tariff in part b, how much profit will it make?

Answer & Explanation Solved by verified expert
4.0 Ratings (738 Votes)
Part a monopolist would produce at point wheremarginal revenue equals marginal costPart bThere are 300 identical consumers in    See Answer
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