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How large is the producer surplus

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Reference no: EM132505025

You are a profit-maximizing monopolist producing Q units of output with a demand curve P = 24 - Q. Your total cost when producing Q units of output is TC = 10 + Q^2. The fixed cost is sunk, and the marginal cost curve is MC = 2Q.

a) If price discrimination is impossible, how large will the profit be? How large will the producer surplus be?

b) Suppose the firm can engage in perfect first-degree price discrimination. How large will the profit be? How large is the producer surplus? Calculate and show on a graph

Reference no: EM132505025

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