Suppose a firm faces the demand function q = 800

Question

Suppose a firm faces the demand function q = 800 - 4P. The firm's total production costs are given by MC(q) = 9.5q + q².
a. If the firm cannot price discriminate, what are its profit-maximizing output and price?
b. If the firm maximizes profits but cannot price discriminate, what are its consumer surplus and producer surplus? Calculate the deadweight loss from market power.
c. If the firm can perfectly price discriminate, what is its output level?
d. If the firm can perfectly price discriminate, what are its consumer surplus and producer surplus? What is the deadweight loss from market power?

Quizplus · Accepted Answer

The Answer of Suppose a firm faces the demand function q = 800 - 4P. The firm's total production costs are given by MC(q) = 9.5q + q². a. If the firm cannot price discriminate, what are its profit-maximizing output and price? b. If the firm maximizes profits but cannot price discriminate, what are its consumer surplus and producer surplus? Calculate the deadweight loss from market power. c. If the firm can perfectly price discriminate, what is its output level? d. If the firm can perfectly price discriminate, what are its consumer surplus and producer surplus? What is the deadweight loss from market power?