Question

Imagine a firm called Bapple that is the monopoly in the market for smartwatches, with cost-functionC(Q)...

Imagine a firm called Bapple that is the monopoly in the market for smartwatches, with cost-functionC(Q) = 3Q2. Imagine the inverse demand function for smartwatches isp(Q) =400−2Q.

1.1 A. What are equilibrium price and equilibrium quantity?

1.2 B. Show the equilibrium price and equilibrium quantity graph-ically. Include the inverse demand curve, firm’s marginal rev-enue curve, and firm’s marginal cost curve.

Now assume that Bapple is able to perfectly price discriminate in the market for smart-watches.

1.3 C. What three conditions must be true for this perfect pricediscrimination to be possible?

1.4 D. What are the equilibrium prices and equilibrium quantitywith perfect price discrimination?

1.5 E. What are consumer surplus, producer surplus, and dead-weight loss at the perfect price discrimination equilibrium?

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