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A Monopolist faces inverse demand curve P = 270 Q. Suppose the marginal cost of production
is 0.
3a.If the monopolist charges a uniform price, what price maximizes its profit? How much profit
does it earn (assuming no fixed costs)?
3b. Under the optimal uniform price from part (3a), what is the deadweight loss?
3c. Suppose that the demand curve above represents the demand of a typical consumer and that
the monopolist employs a two-part tariff consisting of a fixed fee F and a price per unit
consumed p. What values of F and p maximize the monopolists profit?

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A Monopolist faces inverse demand curve P = 270 � Q. Suppose the mar.pdf

  • 1. A Monopolist faces inverse demand curve P = 270 Q. Suppose the marginal cost of production is 0. 3a.If the monopolist charges a uniform price, what price maximizes its profit? How much profit does it earn (assuming no fixed costs)? 3b. Under the optimal uniform price from part (3a), what is the deadweight loss? 3c. Suppose that the demand curve above represents the demand of a typical consumer and that the monopolist employs a two-part tariff consisting of a fixed fee F and a price per unit consumed p. What values of F and p maximize the monopolists profit?