Table 15-18
Tommy's Tie Company, a monopolist, has the following cost and revenue information. Assume that Tommy's is able to engage in perfect price discrimination.

-Refer to Table 15-18.If the monopolist can engage in perfect price discrimination,what is the total revenue when 7 ties are sold?
A) $650
B) $700
C) $910
D) $1080

Question

Table 15-18
Tommy's Tie Company, a monopolist, has the following cost and revenue information. Assume that Tommy's is able to engage in perfect price discrimination.
 
-Refer to Table 15-18.If the monopolist can engage in perfect price discrimination,what is the total revenue when 7 ties are sold?
A) $650 
B) $700 
C) $910 
D) $1080

Quizplus · Accepted Answer

Under perfect price discrimination, the monopolist charges each customer their maximum willingness to pay. In this case, for the first tie, the price will be $100, for the second tie, the price will be $90, and so on until the seventh tie, which will be priced at $30. 
Therefore, total revenue for 7 ties will be:
$100 + $90 + $80 + $70 + $60 + $50 + $30 = $480
However, the monopolist can also charge each customer an additional $10 for customization, which means the total revenue will be:
$480 + $70 (7 customers * $10 customization fee) = $910

Table 15-18 Tommy's Tie Company, a Monopolist, Has the Following Cost and Cost