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Scenario: Tobac Co

Question 113

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Scenario: Tobac Co. is a monopolist in cigarette market in Nicotiana Republic, where the U.S. dollar is used as the official currency. The firm has a constant marginal cost of $2.00 per pack and the fixed cost is $20 million. Through market research, the firm has found that there are two types of customer, Type 1 and Type 2. The demand curves of the two types of customers, and the total market demand curve, along with respective marginal revenue curves, are shown in the following figure.
Scenario: Tobac Co. is a monopolist in cigarette market in Nicotiana Republic, where the U.S. dollar is used as the official currency. The firm has a constant marginal cost of $2.00 per pack and the fixed cost is $20 million. Through market research, the firm has found that there are two types of customer, Type 1 and Type 2. The demand curves of the two types of customers, and the total market demand curve, along with respective marginal revenue curves, are shown in the following figure. -Refer to the scenario above.If Tobac Co.could successfully carry out the third-degree price discrimination,the firm's maximum profit would be ________. A) $450 million B) $400 million C) $320 million D) $260 million
Scenario: Tobac Co. is a monopolist in cigarette market in Nicotiana Republic, where the U.S. dollar is used as the official currency. The firm has a constant marginal cost of $2.00 per pack and the fixed cost is $20 million. Through market research, the firm has found that there are two types of customer, Type 1 and Type 2. The demand curves of the two types of customers, and the total market demand curve, along with respective marginal revenue curves, are shown in the following figure. -Refer to the scenario above.If Tobac Co.could successfully carry out the third-degree price discrimination,the firm's maximum profit would be ________. A) $450 million B) $400 million C) $320 million D) $260 million
Scenario: Tobac Co. is a monopolist in cigarette market in Nicotiana Republic, where the U.S. dollar is used as the official currency. The firm has a constant marginal cost of $2.00 per pack and the fixed cost is $20 million. Through market research, the firm has found that there are two types of customer, Type 1 and Type 2. The demand curves of the two types of customers, and the total market demand curve, along with respective marginal revenue curves, are shown in the following figure. -Refer to the scenario above.If Tobac Co.could successfully carry out the third-degree price discrimination,the firm's maximum profit would be ________. A) $450 million B) $400 million C) $320 million D) $260 million
-Refer to the scenario above.If Tobac Co.could successfully carry out the third-degree price discrimination,the firm's maximum profit would be ________.


A) $450 million
B) $400 million
C) $320 million
D) $260 million

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