Answer to Question #153840 in Microeconomics for Mar

Question

Demand for monopoly output at a price of 2, 3, 4, 5  is 80, 60, 50, 30.

 Determine:
1) max total revenue at the monopoly;
2) max total revenue if price discrimination will be used, for example, if  prices 3, 4, 5 will be set for different customer groups

Answer 1

1) max total revenue at the monopoly is TR=4×50=200.

2) If price discrimination will be used, for example, if prices 3, 4, 5 will be set for different customer groups, then max total revenue is:

$TR = 3×60 + 4×50 + 5×30 = 530.$