question archive A monopoly baby goods store has 4 customers, shown in the table below: Customer Maximum Willingness To Pay for a Baby Swing ($) Max 250 Noah 200 Ohelia 180 Penny 100 If the monopoly store must give all customers the same price, what price should it charge for a baby swing in order to maximize revenue received? a
A monopoly baby goods store has 4 customers, shown in the table below: Customer Maximum Willingness To Pay for a Baby Swing ($) Max 250 Noah 200 Ohelia 180 Penny 100 If the monopoly store must give all customers the same price, what price should it charge for a baby swing in order to maximize revenue received? a
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A monopoly baby goods store has 4 customers, shown in the table below:
| Customer | Maximum Willingness To Pay for a Baby Swing ($) |
| Max | 250 |
| Noah | 200 |
| Ohelia | 180 |
| Penny | 100 |
If the monopoly store must give all customers the same price, what price should it charge for a baby swing in order to maximize revenue received?
a. $250
b. $200
c. $180
d. $100
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Ans: c. $180
Workings:
If the monopolist will charge $250, it can only sell to one customer and the total revenue will be $250 * 1 = $250
If the monopolist will charge $200, it can sell to two customer and the total revenue will be $200 * 2 = $400
If the monopolist will charge $180, it can sell to three customer and the total revenue will be $180 * 3 = $540
If the monopolist will charge $100, it can sell to 4 customer and the total revenue will be $100 * 4 = $400
Thus, the monopolist should charge a price of $180 for a baby swing in order to maximize revenue.
