Homework Answers
A's demand curve is p=10-x and B's demand curve is p=10-2x
Now, total revenue TR=p*x = 10x-2x2
Then, marginal revenue MR = dTR/dx = 10-4x
Marginal cost for the price discriminating monopolist is MC = x
Then, if the monopolist firm wants B to buy only 2 units of the good, it will maximize its profit at the equilibrium point, MR=MC
or, 10-4x = x
or, 5x=10
or, x=2 units
and p=10-2x = 10-(2*2) = $6 is the equilibrium price for each unit of good x.
Thus, here, only option B is a valid response.
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A monopolist has two specific demanders with demand equations: A = 10 - p and B = 10-2p. This monopolist implements an optimal two-part tariff pricing scheme, under which demanders pay a fixed fee a for the right to consume the good and a uniform price p for each unit consumed. The monopolist chooses a and p to maximize profits. This monopolist produces at constant average and marginal costs of AC = MC = 2. The monopolist's profits are and...
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Firm A and Firm B compete in the sale of a product with market inverse demand given by P(Q) = 260-Q, where Q is market output, and Q = 9A + 9B (9A = Firm A's output, 9B = Firm B's output). Firm A's Total Cost function is given by TCA9A) = 209A and Firm B's is given by TCB(9B) = 209B. 15. (20 points) Find the value of Q when Firms A and B Cournot compete to maximize profits...
A monopolist has two specific demanders with demand equations: A = 10-p and B = 10 -2p. This monopolist implements an optimal two-part tariff pricing scheme, under which demanders pay a fixed fee a for the right to consume the good and a uniform price p for each unit consumed. The monopolist chooses a and p to maximize profits. This monopolist produces at constant average and marginal costs of AC = MC = 2. The monopolist's profits are and the...
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