Suppose a firm faces the inverse demand curve P = 100 – Q. Marginal cost is constant at $10.
a. Calculate producer surplus and the deadweight loss under monopoly pricing.
b. Suppose the firm uses block pricing, selling the first 45 units at $55 per unit, the next 20 units at $35 per unit, and the next 20 units at $15 per unit. Calculate producer surplus and the deadweight loss under block pricing.