A monopolist has discovered that the inverse demand function of a person with income M for the monopolist's product is p = .002M - q. The monopolist is able to observe the incomes of its consumers and to practice price discrimination according to income (second-degree price discrimination). The monopolist has a total cost function, c(q) = 100q. The price it will charge a consumer depends on the consumer's income, M, according to the formula A) p = .001M + 50. B) p = .002M - 100. C) p = M². D) p = .01M² + 100. E) None of the above.

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The Answer of A monopolist has discovered that the inverse demand function of a person with income M for the monopolist's product is p = .002M - q. The monopolist is able to observe the incomes of its consumers and to practice price discrimination according to income (second-degree price discrimination). The monopolist has a total cost function, c(q) = 100q. The price it will charge a consumer depends on the consumer's income, M, according to the formula A) p = .001M + 50. B) p = .002M - 100. C) p = M². D) p = .01M² + 100. E) None of the above.

A Monopolist Has Discovered That the Inverse Demand Function of a Person