Task:
In the following table are demand and cost data for a pure monopolist. Complete the table by filling in the columns for total revenue, marginal revenue, and marginal cost. Answer these three questions:
(a) What output will the monopolist produce?
(b) What price will the monopolist charge?
(c) What total profit will the monopolist receive at the profit-maximizing level of output?
Total Marginal Total Marginal
Quantity Price revenue revenue cost cost
0 $34 $______ $ 20
1 32 ______ $______ 36 $______
2 30 ______ ______ 46 ______
3 28 ______ ______ 50 ______
4 26 ______ ______ 54 ______
5 24 ______ ______ 56 ______
6 22 ______ ______ 64 ______
7 20 ______ ______ 80 ______
8 18 ______ ______ 100 ______
9 16 ______ ______ 128 ______
10 14 ______ ______ 160 ______
Price discrimination is often used by businesses. Explain the conditions under which price discrimination is practiced and the economic consequences of price discrimination.