>> Business Economics
Suppose a monopolist’s costs are described by the function C = 200 + 2Q2, and it faces a demand curve of Q = 240 – p.
1. If it cannot price discriminate, what are the profit-maximizing price and quantity? What are profits?
2. If the monopolist uses block pricing by setting an intermediate price, but cannot charge more than two different prices in total, what would be the best prices to choose? How does the use of an intermediate price change profits and consumer surplus compared to the single price result?