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Suzanne Is the Monopoly Seller of a Highly Addictive Consumer

Question 3

Multiple Choice

Suzanne is the monopoly seller of a highly addictive consumer product.Her marginal cost is $2 per unit and she has no other costs.Suzanne knows that new clients have an individual demand curve of P = 10 - q and that previous clients (or repeated customers) have a demand curve of P = 18 - q.Suzanne knows exactly who each client is - that is, whether they are a new client or a previous client.What is Suzanne's profit-maximizing strategy?


A) Sell a bundle of 10 units to each new client for a price of $100; sell a bundle of 18 units to previous clients at a price of $324.
B) Sell a bundle of 8 units to each new client for a price of $48; sell a bundle of 16 units to previous clients at a price of $160.
C) Sell a bundle of 8 units to each new client for a price of $64; sell a bundle of 16 units to previous clients at a price of $128.
D) Sell a bundle of 4 units to each new client for a price of $32; sell a bundle of 6 units to previous clients at a price of $40.
E) None of the above.

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