Should the monopolist advertise

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A monopolist has two types of customers. There are 100 of type A, who will each pay up to $10 for a single unit of goods, and 50 of type B, who will each pay up to $8. Neither is willing to purchase additional units at any price. If it must charge uniform price, find that price.
a. Assume that spending $80 on advertising will attract 100 more type B customers. Should the monopolist advertise? If so, what will happen to the price?

Reference no: EM13187750

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