Econ 256
Intermediate Microeconomics
Professor Ranganath Murthy
Bucknell University, Summer 2005
PROBLEM SET 7
Due July 15,
2005
Solve the following problems. Graphs are required for Questions (1), (2), and (5).
Please use the graph
paper available at
http://www.mathematicshelpcentral.com/graph_paper/files/Form4C.pdf
, or you may
use your own.
Your graphs
should be accurate
.
(1) The
inverse
demand equation
facing the
monopolist
is
P
= 500 – 2
Q
.
Marginal Costs
(
MC
)
are constant at $100, and equal
Average Costs
(
AC
) as well.
(a)
If the
monopolist charges a single ( uniform ) price
, i.e., one price for all consumers
for each unit sold, what are the following: the profitmaximizing quantity, the profit
maximizing price, the maximum level of profit, the consumer surplus, the producer
surplus, the total surplus or welfare, and the deadweight loss?
(b)
Suppose the
monopolist now practices firstdegree or perfect price discrimination
.
Find the following: the profitmaximizing quantity, the profitmaximizing price on the
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 Summer '05
 ??
 Economics, Microeconomics, Supply And Demand, inverse demand, Cournot Equilibrium

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