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27 March, 12:36

A monopolist makes self‑cleaning jackets. At a price of $100 each, it can sell 20 jackets. At a price of $98 each, it can sell 21 jackets. Assume the monopolist cannot price discriminate. When charging $ 100 per jacket, total revenue is

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  1. 27 March, 16:08
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    The answer is $2,000

    Explanation:

    A monopolist is a single seller in the industry. A monopolist can influence the market price because he is the only one selling the product in the industry and has many buyers. Monopoly is an imperfect market and there are price discriminations in this market. A monopolist can charge different prices for different people.

    We have first degree price discriminations, second degree price discriminations and third degree price discriminations.

    Total revenue = selling price x units sold

    Selling price is $100

    Units sold is 20 jackets

    Total revenue is therefore, $100 x 20 jackets

    =$2,000
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