Tobac Co Is a Monopolist in Cigarette Market in Nicotiana Republic

Multiple Choice

Tobac Co. is a monopolist in cigarette market in Nicotiana Republic where the U.S. dollar is used as its official currency. The firm faces the demand curve shown below. The firm has a constant marginal cost of $2.00 per pack. The fixed cost of the firm is $50 million. To answer the questions below, it is useful to know that the equation of the (inverse) demand curve is P = 8 - 0.04Q, where Q is the quantity demanded (in millions of packs) and P is the price per pack (in $) . Also, you should draw in the marginal revenue curve

-Tobac Co. is a monopolist in cigarette market in Nicotiana Republic, where the U.S. dollar is used as the official currency. The firm faces the demand curve shown below. The firm has a constant marginal cost of $2.00 per pack. If Tobac Co. could successfully carry out the first-degree (or perfect) price discrimination, the social surplus would ________ and the consumer surplus would be ________.

A) not be maximized; $112.5 million
B) not be maximized; $0
C) be maximized; $0
D) be maximized; $450 million