(Figure: Monopolist) Refer to the figure. Based on the demandcurves for a monopolist's product in two different markets-Market A and Market B-if the monopolist were to charge auniform price of $10 in both markets, how much profit wouldthe monopolist lose?

Question

Quizplus · Accepted Answer

To find out how much profit the monopolist would lose, we need to find the difference in profits between charging a uniform price of $10 in both markets and charging the profit-maximizing price in each market.

For Market A, the profit-maximizing price is $15 and the corresponding profit is $225. If the monopolist were to charge $10 in Market A, the profit would decrease to $112.50, resulting in a loss of $112.50 - $225 = -$112.50.

For Market B, the profit-maximizing price is $5 and the corresponding profit is $75. If the monopolist were to charge $10 in Market B, the profit would decrease to $37.50, resulting in a loss of $37.50 - $75 = -$37.50.

The total loss in profit would be the sum of the losses in each market, which is (-$112.50) + (-$37.50) = -$150. However, the question asks for the absolute value of the loss, so the answer is $150.

Therefore, the monopolist would lose $48.75 in profit if they were to charge a uniform price of $10 in both markets.

(Figure: Monopolist) Refer to the Figure