Use the table below to answer the following questions.
Table 12.4.1
-Refer to Table 12.4.1.If a perfect price-discriminating monopoly faces the demand schedule shown in Table 12.4.1 and if marginal cost is constant at $3,output is
A)2 units.
B)3 units.
C)4 units.
D)5 units.
E)6 units.

Question

Use the table below to answer the following questions.
Table 12.4.1 
-Refer to Table 12.4.1.If a perfect price-discriminating monopoly faces the demand schedule shown in Table 12.4.1 and if marginal cost is constant at $3,output is
A)2 units. 
B)3 units. 
C)4 units. 
D)5 units. 
E)6 units.

Quizplus · Accepted Answer

In perfect price discrimination, the monopolist sells each unit at the maximum price consumers are willing to pay. The monopolist will continue to produce until the price equals the marginal cost. If the marginal cost is $3, the monopolist will produce up to the point where the price is $3. Assuming the demand schedule is ordered from highest to lowest price, the output will be 5 units if the price for the 5th unit is $3.

Use the Table Below to Answer the Following Questions