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Consider a monopolist who can make a take-it-or-leave-it offer to a single consumer. The monopolist’s cost function is given by C(q) = 4q. The consumer has a budget of m = 100. The consumer’s utility function is given by U(y,q) = y1/2 + 2q, where q is the quantity of the monopolist’s product and y denotes remaining money. What is the optimal offer to the consumer?

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Joshua Stredder
Joshua StredderLv10
29 Apr 2021

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