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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)
find an identical output for each firm that maximizes joint profits.
Why would one be unable to associate particular amounts of calendar time with the concepts of market period, short-run period, long-run period and historical period ? List as many reasons as you can why the low of diminishing retunes or variable prop..
In oligopoly, each firm is acutely aware of the production and marketing decisions of all competitors and carefully considers the potential competitive reactions in all decisions. Discuss whether firms in other market structures consider the potentia..
Why has the share of healthcare output produced by hospitals fallen? Will this trend continue? Can you think of a policy or technology change that would further reduce hospital use? Can you think of a policy or technology change that would increase h..
Consider two communities. In one community, ten families have incomes of $100,000 each and ten families have incomes of $20,000 each. In the other community, ten families have incomes of $200,000 each ten families have incomes of $22,000 each. In wh..
Suppose you have a sample of body weights from a population of males above 20 years of age. Your sample size is 121 men. Body weights are approximately normally distributed. Your sample mean is 190 pounds, and your estimated population standard devia..
Why is an increase in number of varieties of a good regarded as a gain from trade. Can you think of economic disadvantages associated with greater product variety.
In each of the situations described, state which component of aggregate demand (C, I, G, or NX) of the United States is affected and whether aggregate demand will increase or decrease as a result. The recent hike in the federal-funds rate target incr..
Do you agree or disagree with the statement which: A monopolist always charges the highest possible price.
"Exotic" mortgages became popular in part because they allow someone of:
How is GDP a measure of both output and income? How is it possible that both measures of GDP - income and expenditure approach - can end up with the same number?
As before pleasing the job, you admit a surprise offer from a competitor. Elucidate how much producer surplus have you earned, if you actually earn $2600 during the month.
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