- 21 Suppose The Widget Market Is Monopolized The Market Demand Curve Is Q 90 10p Or P 9 0 1q And The Monopolist 1 (77.44 KiB) Viewed 37 times
21. Suppose the widget market is monopolized, the market demand curve is Q = 90 - 10P (or P=9 - 0.1Q) and the monopolist's marginal cost (MC) is constant at $1. If this is a "single price" monopolist (one that does not engage in price discrimination), the market price (PM) and amount exchanged (QM) will be: a) PM = 5 and QM –40 b) PM = 1 and QM =40 c) PM = 1 and OM =80 d) PM = 9 and OM =0 e) unknown, based on the information provided. 22. Following up on question 21: How will the quantity exchanged (QM) and consumer surplus (CS) change relative to the solution found in question 21 if the monopolist instead engages in perfect price discrimination? 5 a) QM will decrease and CS will decrease. b) QM will decrease and CS will increase. c) OM will increase and CS will decrease. d) OM will increase and CS will increase. e) OM will increase and the change in CS cannot be determined.