Module 5 Monopoly Problems

Module 5 Monopoly Problems - Consider the following demand...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Consider the following demand schedule. Does it apply to a perfectly competitive firm? Compute marginal and average revenue. Information Given Price Quantity Price Quantity $100.00 1 $70.00 1 $95.00 2 $55.00 2 $88.00 3 $40.00 3 $80.00 4 $22.00 4 Information Used Price Quantity TR AR MR Price Quantity TR AR $100.00 1 $100 $100 $70.00 1 $70 $70 $95.00 2 $190 $95 $90 $55.00 2 $110 $55 $88.00 3 $264 $88 $74 $40.00 3 $120 $40 $80.00 4 $320 $80 $56 $22.00 4 $88 $22 ` Interpretation This demand schedule does not apply to a perfectly competitive firm because the firm is using a price discrimination strategy. To some buyers, who value the good more, the firm is charging a high price and to other buyers, who do not value the good as much, the price charged is less. Such a strategy is not possible in a perfectly competitive firm since in perfect competition there are large number of buyers and sellers and sellers are price takers and have no control, whatsoever, on the price that they charge. and sellers and sellers are price takers and have no control, whatsoever, on the price that they charge....
View Full Document

This note was uploaded on 08/04/2011 for the course ECN 601 taught by Professor Professor during the Spring '10 term at Grand Canyon.

Page1 / 5

Module 5 Monopoly Problems - Consider the following demand...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online