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Suppose that individual demand for a product is given by QD = 1000 - 5P. Marginal revenue is MR = 200 - 0.4Q, and marginal cost is constant at $20. There are no fixed cost.

A. The firm is considering a quantity discount. The $120, and further units can be purchased at a price $80. How many units will the consumer buy in total?

B. Show that this second degree price discrimination scheme is more profitable than a single monopoly price.

Econometrics, Economics

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