Solutions? 13. (Use the information below for Questions 13-16.) Consider a monop

Question

Solutions? 13. (Use the information below for Questions 13-16.) Consider a monopolist that facess the following demand curve for widgets: 10 10 30 The marginal cost of producing widgets is constant at $7 per widget. If this were a competitive market, the equilibrium price would be would be and the equilibrium quantity (a) $7; 40 (b) S0; 40 (c) $10, 30 (d) $7; 30 14. What price will the monopolist charge if it must charge the sane price to everyone (i.e. it is a single-price monopolist)? What quantity will it produce? (a) $20; 10 (b) $20, 30 (c) $10; 30 (d) $10, 40 15. Suppose the monopolist could perfectly price discriminate. How many widgets would it produce? (a) 0 (b) 10 (c) 30 (d) 40

Explanation / Answer

13. In case of perfectly competitive market

Price=Marginal Revenue=Marginal Cost

Price= $7

Quantity= 30

14. In case of monopoly

Price = $10

Q=30

15. If monopolist will price discriminat

quantity sold at price $ 20 = 10

quantity sold at price $ 10= 20

Total quantity sold = 30

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