Draw the graph for a monopoly with demand, marginal revenue, and marginal cost curves. Identify the profit-maximizing output level (Qm) and price (Pm).
Suppose the monopolist sells Qm units of output at the regular price and then puts the product on sale at a lower price, Ps. Show the new price and quantity. Identify the consumer surplus of the additional sales. What happens to the firm’s profits? Does price discrimination lead to a more efficient or less efficient outcome? Why or why not?
Submission Requirements:
- The discussion grade will be based on how thorough and detailed your posts are.
- Your initial post must consist of a minimum of 1 fully-developed paragraph, and answer the question(s) in detail.
- Cite in text a minimum of 1 academic or professional source in support of your response.
- You must create your own graphs for this activity and explain them in full. Use the Inset Image icon to insert an image of your graphs into the text box.
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