Reference no: EM132414819

Problem: Suppose a monopolist expects to encounter 8 customers in a typical day. Their reservation prices are sorted and shown in the table below.

 

Customer | Reservation Price ($)

 

     A                     30

 

     B                     25

 

     C                     22

 

     D                     20

 

     E                     18

 

     F                     16

 

    G                      13

 

    H                      10

 

If the marginal cost is $9, how many customers will the monopolist serve?

 

Select one:

 

a. 5

 

b. 6

 

c. 8

 

d. 7

 

Continue with the previous question. How much will the monopolist charge?

 

Select one:

 

a. 16

 

b. 18

 

c. 10

 

d. 9

 

Continue with the previous question. What will be the monopolist's economic profit?

 

Select one:

 

a. $0

 

b. $40

 

c. $50

 

d. $45

 

Continue with the previous question. The monopolist is very experienced in the business and knows the reservation price of each of his customers. If he is allowed to charge any price he likes to any consumer, how many customers will he serve?

 

Select one:

 

a. 8

 

b. 6

 

c. 5

 

d. 7

 

Continue with the previous question. What will be the monopolist's new economic profit?

 

Select one:

 

a. $109

 

b. $82

 

c. $0

 

d. $154