How much money does A have? What are her other options for how to use it? How much would it cost to move? It’s extremely uncommon for people to be in a situation where they have no choice but to deal with a monopolist; indeed, that pretty much only occurs as the result of outside-the-market constraints such as regulation.
How much money does A have? What are her other options for how to use it? How much would it cost to move? It’s extremely uncommon for people to be in a situation where they have no choice but to deal with a monopolist; indeed, that pretty much only occurs as the result of outside-the-market constraints such as regulation.
Replace dollars with utilons. That automagically incorporates all of those considerations into the utilon calculation we are provided.