Hi, anyone got any insight to this question?
A monopolist provides service to two customers, 1 and 2. Their inverse demand
curves are given by P1(Q1) = 6 – Q1 and P2(Q2) = 5 – Q2, respectively. The monopolist’s
marginal cost of production is zero, but it incurs fixed costs of F per period of operation.
a) (5 points) Suppose that the monopolist could implement perfect, 1st Degree price
discrimination, extracting all of the surplus of both consumers. What is the largest value
of F that would allow the monopolist to at least break even?