use the table to answer the follwoing question :
-If an individual could charge a different price to each consumer in both cities (perfect price discrimination),how much more would this person earn compared to when he or she can charge a single price to everyone (monopoly)?
A) $40
B) $39
C) $35
D) $18
E) $10

Question

use the table to answer the follwoing question : 
-If an individual could charge a different price to each consumer in both cities (perfect price discrimination),how much more would this person earn compared to when he or she can charge a single price to everyone (monopoly)?
A) $40 
B) $39 
C) $35 
D) $18 
E) $10

Quizplus · Accepted Answer

To find out the amount earned through perfect price discrimination, we need to calculate the total revenue for each city separately by charging each customer the highest price they are willing to pay.

For city A, the total revenue from ideal pricing is calculated as:
(5 customers x $15) + (4 customers x $10) + (3 customers x $5) = $105

For city B, the total revenue from ideal pricing is calculated as:
(4 customers x $15) + (4 customers x $10) + (4 customers x $5) = $120

Therefore, the total revenue earned through perfect price discrimination is $225 ($105 + $120).

On the other hand, if the seller could only charge a single price to everyone, the most profitable price would be $15, which would result in a total revenue of:
(9 customers from city A + 12 customers from city B) x $15 = $315

The difference in revenue between perfect price discrimination and the monopoly is $90 ($315 - $225), which is option D ($18 more earnings per city).

Use the Table to Answer the Follwoing Question