The following is information for a perfectly price...

The following is information for a perfectly price discriminating monopolist. Demand: P = 1300 – 0.1Q Marginal revenue = P = 1300 – 0.2Q Marginal cost = ATC = 130 Calculate the producer surplus for the monopolist. You do not need to enter the $ sign or commas for large numbers. E.g. $50,000 can be entered as 50000 When answers are not whole numbers you can leave one number after the decimal. E.g. 10.2874 can be entered as 10.3

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Transcript

00:01 So here we have a monopolist who's facing the demand curve, q equals 70 minus p.

00:05 I don't think that minus sign got picked up perfectly by the website here.

00:11 But remember that demand slopes have to slope down.

00:13 So there's got to be a negative sign in there.

00:15 Can't be q equals 70p, then that's an upward sloping demand here.

00:18 We definitely don't have that.

00:20 So i can rewrite this as p equals to 70 minus q, and that's a straight line with a slope of one going from 70 to 70, right? and we have a marginal cost curve at six.

00:33 So here's my marginal cost curve, right? so a competitive market would price down here at this intersection of demanded marginal cost, but the monopolist doesn't want to do that.

00:43 If the monopolist prices at six, it won't make any profits.

00:46 We want to maximize profits.

00:47 So we have to find the optimal point to produce.

00:53 But the key thing that makes this problem really easy is we have perfect price discrimination.

00:58 And what is perfect price discrimination means? it means that everyone can get charged their maximum benefit.

01:08 So the very first person values this at 70.

01:11 So the monopolist goes to the first person, says, i'm selling it to you for 70.

01:16 Then the next person gets sold it for 69 .5...