Demand Schedule Facing a Perfectly Price- Discriminating Firm

-Using the demand schedule in the above table, if the firm's marginal cost is constant at $3.00, output for a perfectly price- discriminating monopolist is
A) 4 units.
B) 2 units.
C) 5 units.
D) 3 units.

Question

Demand Schedule Facing a Perfectly Price- Discriminating Firm
 
-Using the demand schedule in the above table, if the firm's marginal cost is constant at $3.00, output for a perfectly price- discriminating monopolist is
A) 4 units. 
B) 2 units. 
C) 5 units. 
D) 3 units.

Quizplus · Accepted Answer

A perfectly price-discriminating monopolist will produce and sell up to the point where price equals marginal cost. Since the marginal cost is constant at $3.00, the monopolist will continue to produce and sell units as long as the price they can charge for each unit is at or above $3.00. Without the specific demand schedule provided, the general principle is that the monopolist maximizes output to the point where the price from the demand schedule equals the marginal cost, assuming the demand schedule has prices at or above $3.00 for at least some quantities.