Exhibit 23-6 Refer to Exhibit 23-6. Let C be the demand curve facing a perfectly price-discriminating monopolist and P₀ the price it charges for the last unit of X it sells. The marginal cost of the last unit A)is less than P₀. B)equals P₀. C)is greater than P₀. D)There is not enough information provided to answer this question.

Question

Quizplus · Accepted Answer

In perfect price discrimination, the monopolist charges the highest price that each individual buyer is willing to pay for each unit, which means that P₀ represents the marginal revenue of the last unit sold. As the monopolist is maximizing profits, it will produce up to the point where marginal revenue equals marginal cost. Since it charges P₀ for the last unit sold, the marginal cost of that unit must also be P₀. Therefore, the correct answer is B.

Exhibit 23-6 Refer to Exhibit 23-6. Let C Be the Demand Curve