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11) A firm faces the following demand and Marginal Cost P = 10,000 - 10Q MC = 5Q. a. Assume that the firm charge a uniform price to all its
MC = 5Q.
a. Assume that the firm charge a uniform price to all its customers. What profit should the firm charge? Is there a consumer surplus? Compute it.
b. What is the lowest price that the firm will charge if it were to enact a first-degree price discrimination strategy? Determine the quantity produced at this price.
c. Determine the firm's total profit in the case its management decides for a perfect price discrimination strategy (there are no fixed cost). Determine the change in consumer surplus obtained by switching from uniform price (a) to first-degree price discrimination (b).
