1. The block-pricing monopoly faces a linear demand curve for each identical consumer: P = 90-Q. The monopoly has a constant marginal and average cost of m = = $30. The monopoly can set three prices, P₁, P2, P3, depending on the quantity a consumer purchases. a) Determine the profit-maximizing prices.

Survey Of Economics
10th Edition
ISBN:9781337111522
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter8: Monopoly
Section: Chapter Questions
Problem 5SQ
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b) Calculate consumer surplus, producer surplus, total surplus, and deadweight loss

c)Compare your findings to the case of two block prices 

1. The block-pricing monopoly faces a linear demand curve for each identical consumer: P = 90-Q. The
monopoly has a constant marginal and average cost of m = $30. The monopoly can set three prices,
P₁, P2, P3, depending on the quantity a consumer purchases.
a) Determine the profit-maximizing prices.
Transcribed Image Text:1. The block-pricing monopoly faces a linear demand curve for each identical consumer: P = 90-Q. The monopoly has a constant marginal and average cost of m = $30. The monopoly can set three prices, P₁, P2, P3, depending on the quantity a consumer purchases. a) Determine the profit-maximizing prices.
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