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Scenario: Tobac Co

Question 258

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Scenario: Tobac Co. is a monopolist in cigarette market in Nicotiana Republic, where the U.S. dollar is used as the official currency. The firm has a constant marginal cost of $2.00 per pack and the fixed cost is $20 million. Through market research, the firm has found that there are two types of customer, Type 1 and Type 2. The demand curves of the two types of customers, and the total market demand curve, along with respective marginal revenue curves, are shown in the following figure.
Scenario: Tobac Co. is a monopolist in cigarette market in Nicotiana Republic, where the U.S. dollar is used as the official currency. The firm has a constant marginal cost of $2.00 per pack and the fixed cost is $20 million. Through market research, the firm has found that there are two types of customer, Type 1 and Type 2. The demand curves of the two types of customers, and the total market demand curve, along with respective marginal revenue curves, are shown in the following figure. -Refer to the scenario above.If Tobac Co.could successfully carry out the third-degree price discrimination,the firm would charge type 1 customers ________ per pack and type 2 customers ________ per pack. A) $5.00; $7.00 B) $7.00; $5.00 C) $2.00; $2.00 D) $12.00; $8.00
Scenario: Tobac Co. is a monopolist in cigarette market in Nicotiana Republic, where the U.S. dollar is used as the official currency. The firm has a constant marginal cost of $2.00 per pack and the fixed cost is $20 million. Through market research, the firm has found that there are two types of customer, Type 1 and Type 2. The demand curves of the two types of customers, and the total market demand curve, along with respective marginal revenue curves, are shown in the following figure. -Refer to the scenario above.If Tobac Co.could successfully carry out the third-degree price discrimination,the firm would charge type 1 customers ________ per pack and type 2 customers ________ per pack. A) $5.00; $7.00 B) $7.00; $5.00 C) $2.00; $2.00 D) $12.00; $8.00
Scenario: Tobac Co. is a monopolist in cigarette market in Nicotiana Republic, where the U.S. dollar is used as the official currency. The firm has a constant marginal cost of $2.00 per pack and the fixed cost is $20 million. Through market research, the firm has found that there are two types of customer, Type 1 and Type 2. The demand curves of the two types of customers, and the total market demand curve, along with respective marginal revenue curves, are shown in the following figure. -Refer to the scenario above.If Tobac Co.could successfully carry out the third-degree price discrimination,the firm would charge type 1 customers ________ per pack and type 2 customers ________ per pack. A) $5.00; $7.00 B) $7.00; $5.00 C) $2.00; $2.00 D) $12.00; $8.00
-Refer to the scenario above.If Tobac Co.could successfully carry out the third-degree price discrimination,the firm would charge type 1 customers ________ per pack and type 2 customers ________ per pack.


A) $5.00; $7.00
B) $7.00; $5.00
C) $2.00; $2.00
D) $12.00; $8.00

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