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1.) A firm with market power faces the following demand and cost.
P = 60 - Q Cost = 0.5Q ^2 (no fixed cost)
MC = Q
a) If the firm does not price discriminate, what quantity will it produce and what price will it charge? What will be the firm's profit?b) What will be the firm's profit with perfect price discrimination?c) To implement perfect price discrimination you will have to use salespersons. What is the maximum amount total you will spend on salespersons?
2. The demand of a typical consumer for a good is given by
P = 15 - Q
The firm's cost is given by Cost = 0.5Q^ 2 (no fixed cost)
a) Charging only one price, what will be the firm's profit earned from a typical consumer (find Q, P, then profit)b) Using two-part pricing , what will be the entry (membership) fee? What will be the per-unit fee?c) Compute the profit earned from a typical consumer with two-part pricing. Hint: same as perfect price discrimination profit.
For the first time in two years, Big G (the cereal division of General Mills) raised cereal prices by 2 percent. If, as a result of this price increase, the volume of all cereal sold by Big G dropped by 3 percent, what can you infer about the own ..
A firm produces GPS devices in a monopolistically competitive market and has the following cost function: TC = 270 + 40Q + 2Q2 MC = 40 + 4Q Demand for this firm's product is given as: QD = 500 - 2P a) To maximize profits,what price will it charge
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ADVANCED ANALYSIS Let MUA = z = 10 - x and MUB = z = 21 - 2y, where z is marginal utility per dollar measured in utils, x is the amount spent on product A, and y is the amount spent on product B. Assume that the consumer has $10 to spend on A and ..
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A firm is operating in a competitive market. The firm has a cost function C(Y)=2Y^2+2 and marginal cost MC=4Y. If the price is $20. a) what will the maximum profit be b) If the inverse demand is given by P=30-Y, what quantity will the firm produce..
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