+1-415-670-9189
info@expertsmind.com
How much profit does the firm collect with the prices set
Course:- Business Economics
Reference No.:- EM13851021




Assignment Help
Expertsmind Rated 4.9 / 5 based on 47215 reviews.
Review Site
Assignment Help >> Business Economics

Suppose there are two types of customers for a cell phone service: undergraduates (U) and grad Students (G). The aggregate (inverse) demand curve for undergraduates is PU = 100 − 0.25QU and the aggregate (inverse) demand curve for the graduate students is PG = 50 − QG. The firm providing the cell phone service is a monopolist with a cost function characterized by C(Q) = 4Q + 10.

(a) Suppose the firm is restricted to set a single price for both types of customers (i.e., no price discrimination). What price does the firm set? How much profit does the firm collect?

(b) How much consumer surplus is generated at the price identified in (a)?

(c) Suppose the firm sets a price of $48 for a quantity smaller or equal than 200 minutes and a price of $46 for a quantity beyond the 200th minute. In this situation, what quantity should undergraduates choose? And what quantity should graduate students choose?

(d) What consumer surplus will each customer type enjoy at the prices set in (c)?

(e) How much profit does the firm collect with the prices set in (c)?

(f) Why would a firm choose a second-degree price discrimination strategy rather than a first- degree price discrimination strategy? (You only need to provide one reason)




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Business Economics) Materials
Read the following three situations. Describe what you would do in EACH situation. Integrate the elements of reasoning and intellectual standards in your writing to show an
Economists tend to favor revealed preference methods of valuing non-marketed goods like environmental quality and natural resources. What are two reasons why revealed preferen
According to the President's economic advisors, the US could have borrowed and spent more money on fiscal stimulus without hurting the economy. And, after all, our annual defi
The war in Iraq comes to an end. Iran and Afghanistan lay pipes to generatemore oil. The United States and Venezuela enter into an era of friendship. Which of the following co
Write a Java application using an Integrated Development Environment (IDE) (or directly from the command line compiler) that calculates the total annual compensation of a sa
Is your employer/ hospital in a competitive market? Market competition affects revenues. Why do you think your workplace is using more technology including nursing staffing so
Fill in the blanks below. In an unconstrained maximization problem: The optimal level of activity occurs at the activity level for which______equals. At the optimal level of a
Why do workers in the United States tend to make a higher wage than workers in other countries? The authors state that it “is in the interest of each producer to keep cost dow