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Two-part tariff the maximizes profits

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Reference no: EM131160102

Managerial Economics.

Please show math used, clearly and step-by-step. Thanks! 

All 500 consumers in a market have identical demand for a product that is described by individual demand curves P=40-2q.  A monopolist produces the product and has a cost function of TC(Q)=10000+8Q.  (Answers must be within 1 of the true value to count as correct.)

A) What is the use fee in the two-part tariff the maximizes profits? 

B) What is the entry fee in the two-part tariff the maximizes profits?

Reference no: EM131160102

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