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3. (15 points) You observe a monopolist charging 2 different prices to two different groups of...
D What is the purpose of charging different groups of customers different prices? Supplement the three...
D What is the purpose of charging different groups of customers different prices? Supplement the three broad examples in the Last Word with two additional examples of your own. Hint: Think of price discounts based on group characteristics or time of purchase.
4. We have discussed in class that a monopolist can maximize its profit by charging different...
4. We have discussed in class that a monopolist can maximize its profit by charging different prices from two (or more) different groups of consumers. If you were a monopolist and could charge different prices for your product in domestic and foreign markets, how would you set your prices? Which market would receive a larger quantity of your product? Explain carefully how you would make this decision. Make sure to discuss the rationale behind it.
A) Suppose a monopoly sells to two identifiably different types of customers, A and B, who...
A) Suppose a monopoly sells to two identifiably different types of customers, A and B, who are unable to practice arbitrage. The inverse demand curve for group A is PA = 29 - QA, and the inverse demand curve for group B is PB = 19 - 2QB. The monopolist is able to produce the good for either type of customer at a constant marginal cost of 3, and the monopolist has no fixed costs. If the monopolist practices group...
3. Consider a monopolist facing two customer groups. The first has demand q1 = 50−2p1 and...
3. Consider a monopolist facing two customer groups. The first has demand q1 = 50−2p1 and the second has demand q2 = 60−p2. The firm has marginal cost MC(q) = q, where q = q1 +q2 is the total amount sold. (a) Suppose it could first degree price discriminate and charge the full willingness to pay for every unit. How many units does it sell to each group? (b) Suppose it can separate customers into the two groups (third degree...
Suppose that a price-discriminating monopolist has segregated its market into two groups of buyers as shown...
Suppose that a price-discriminating monopolist has segregated its market into two groups of buyers as shown in the table below. a. Calculate the missing total-revenue and marginal-revenue amounts for Group 1. Instructions: Enter your answers as whole numbers in the gray-shaded cells. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. Group 1 Group 2 Price Quantity Total Marginal Total Quantity Marginal Demanded Revenue Price Revenue Demanded Revenue Revenue...
There are two groups of customers in the market. Demand of group number 1 is Q1(p) = 3−0.5p, and demand of group number...
There are two groups of customers in the market. Demand of group number 1 is Q1(p) = 3−0.5p, and demand of group number 2 is Q2(p) = 5−2p. The market is served by a monopolist with MC = 1. (a) Write down the market demand function (remember that demand function should be welldefined for all possible prices). Plot it. (b) Derive the MR(Q) for the market demand and plot it on the graph from above. (c) What price will the...
You are the manager of a monopoly that sells a product to two groups of consumers...
You are the manager of a monopoly that sells a product to two groups of consumers in different parts of the country. Group 1’s elasticity of demand is -3, while group 2’s is -5. Your marginal cost of producing the product is $40. a. Determine your optimal markups and prices under third-degree price discrimination. Instructions: Enter your responses rounded to two decimal places. Markup for group 1: Price for group 1: $ Markup for group 2: Price for group 2:...
5. Consider a market with a monopolist that can price discriminate between two groups. The inverse...
5. Consider a market with a monopolist that can price discriminate between two groups. The inverse demand equation for group 1 is R(Q.) = 156 - 50 where P is the price group 1 is charged and Q1 is the total quantity demanded by group 1. The inverse demand equation for group 2 is B(O2) = 48-22 where B, is the price group 2 is charged and Q2 is the total quantity demanded by group 2. The total amount the...
A monopolist practices third degree price discrimination by separating its customers into two groups: consumers under...
A monopolist practices third degree price discrimination by separating its customers into two groups: consumers under 65 and senior citizens. The monopolist's marginal oost is MC = 0.05q, where q is the total output in both markets. The marginal cost does not depend on the market in which the goods are sold. The demand curves are Adults: PA-25-1/6 x QA-25-0.1667 x QA Seniors: PS = 15-⅛xQs-15-0.125 x Qs ● . A. What is the total industry demand curve? (Rewrite each...
1. Suppose that demand is given by P=100-Q, marginal revenue is MR=100-2Q, and marginal cost (and...
1. Suppose that demand is given by P=100-Q, marginal revenue is MR=100-2Q, and marginal cost (and average cost) is constant at 20. a. What single price will maximize a monopolist's profit? b. What will be the prices and quantity under two-part pricing? It involves a lump sum fee (e.g., membership fee) equal to the consumer surplus at competitive prices and user fees (i.e., unit price) equal to the competitive price. c. Now the monopolist has another group of consumers whose...
4. We have discussed in class that a monopolist can maximize its profit by charging different prices from two (or more) different groups of consumers. If you were a monopolist and could charge different prices for your product in domestic and foreign markets, how would you set your prices? Which market would receive a larger quantity of your product? Explain carefully how you would make this decision. Make sure to discuss the rationale behind it.
Suppose that a price-discriminating monopolist has segregated its market into two groups of buyers as shown in the table below. a. Calculate the missing total-revenue and marginal-revenue amounts for Group 1. Instructions: Enter your answers as whole numbers in the gray-shaded cells. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. Group 1 Group 2 Price Quantity Total Marginal Total Quantity Marginal Demanded Revenue Price Revenue Demanded Revenue Revenue...
5. Consider a market with a monopolist that can price discriminate between two groups. The inverse demand equation for group 1 is R(Q.) = 156 - 50 where P is the price group 1 is charged and Q1 is the total quantity demanded by group 1. The inverse demand equation for group 2 is B(O2) = 48-22 where B, is the price group 2 is charged and Q2 is the total quantity demanded by group 2. The total amount the...
A monopolist practices third degree price discrimination by separating its customers into two groups: consumers under 65 and senior citizens. The monopolist's marginal oost is MC = 0.05q, where q is the total output in both markets. The marginal cost does not depend on the market in which the goods are sold. The demand curves are Adults: PA-25-1/6 x QA-25-0.1667 x QA Seniors: PS = 15-⅛xQs-15-0.125 x Qs ● . A. What is the total industry demand curve? (Rewrite each...
1. Suppose that demand is given by P=100-Q, marginal revenue is MR=100-2Q, and marginal cost (and average cost) is constant at 20. a. What single price will maximize a monopolist's profit? b. What will be the prices and quantity under two-part pricing? It involves a lump sum fee (e.g., membership fee) equal to the consumer surplus at competitive prices and user fees (i.e., unit price) equal to the competitive price. c. Now the monopolist has another group of consumers whose...
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