-The monopoly represented in Figure 10-26 has constant marginal cost and no fixed costs.If the firm is a perfect price discriminator,it will produce
A)Q** units
B)Q* units
C)between 0 and Q* units
D)between Q* and Q** units
E)more than Q** units

Question

-The monopoly represented in Figure 10-26 has constant marginal cost and no fixed costs.If the firm is a perfect price discriminator,it will produce
A)Q** units 
B)Q* units 
C)between 0 and Q* units 
D)between Q* and Q** units 
E)more than Q** units

Quizplus · Accepted Answer

The firm will produce Q** units because it can charge each consumer their willingness to pay, so it will produce the quantity where marginal cost equals the highest willingness to pay.

-The Monopoly Represented in Figure 10-26 Has Constant Marginal Cost