9. A monopolist produces a good at a constant marginal cost of 4. Suppose the monopolist is able to practice first-degree price discrimination (FDPD). The (in- verse) market demand function for the good is given by P=10-bQ where P is price, Q is quantity and b> 0 is a constant. Let DL(Q) denote the deadweight loss at quantity Q, and let CS(Q) denote the consumer surplus at Q. (a) Under FDPD, the marginal revenue function of the monopolist is the same as the market demand function. Is this true or false? Explain carefully

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Chapter16: Government Regulation
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Problem 10E
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9. A monopolist produces a good at a constant marginal cost of 4. Suppose the
monopolist is able to practice first-degree price discrimination (FDPD). The (in-
verse) market demand function for the good is given by
P=10-bQ
where P is price, Q is quantity and b> 0 is a constant. Let DL(Q) denote the
deadweight loss at quantity Q, and let CS(Q) denote the consumer surplus at
Q.
(a) Under FDPD, the marginal revenue function of the monopolist is the same
as the market demand function. Is this true or false? Explain carefully.
Transcribed Image Text:9. A monopolist produces a good at a constant marginal cost of 4. Suppose the monopolist is able to practice first-degree price discrimination (FDPD). The (in- verse) market demand function for the good is given by P=10-bQ where P is price, Q is quantity and b> 0 is a constant. Let DL(Q) denote the deadweight loss at quantity Q, and let CS(Q) denote the consumer surplus at Q. (a) Under FDPD, the marginal revenue function of the monopolist is the same as the market demand function. Is this true or false? Explain carefully.
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