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Unformatted text preview: 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 profit-maximizing 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 first-degree or perfect price discrimination ....
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- Summer '05