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You are the manager of a monopoly. A typical consumers inverse demand function for your firms product is P = 400 - 100, and
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Answer #1

a. $5,120

(Profit under two part pricing scheme is given by area of triangle = (1/2)*(Pmax - MC)*Q
Pmax = 400 - 10Q = 400 - 10(0) = 400
MC = dC/dQ = 80

We determine output at P = MC,
400 - 10Q = 80
So, 10Q = 400 - 80 = 320
So, Q = 320/10 = 32

Thus, profit = (1/2)*(400-80)*32 = (320)*16 = 5120)

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