Question

5. Consider the following market demand for a good that consumers buy one unit at a time (e.g. smartphones, cars, game consoles, etc). Q=620-2P.

A market research shows that there are two groups of consumers, A and B, with different sensitivity to price change. Group A’s demand is estimated to be QA=200-0.5P and Group B’s demand is estimated to be QB=420-1.5P. Marginal Cost is assumed to be $30.

Given the information above, determine the most appropriate optimal pricing strategy and calculate the appropriate price(s). Show your answer(s) on a well-labeled graph(s).

Answer 1

Answert 5 Given thabi- | the following market demand fa a good that consumers bayone unft at a time. Erample: - (H) Smartphone 1 200 m game consoles JQ=620-20 A market olesearch shocas that there are tooo grouph of consumer A and B with different Sens hul by to price change. - Group A's demand of Estimated to I be [QA = 200 20:0p) A Goup B's demand is estimated to a QB =420-115 p o the marginal cost to anumed

QA = 200 - 0.51 00-p1-0-5 total deconne fd firm A=PQA = 2008-0-6p? MR(A)= dI RAldea a = 200-81-0.5 IMR(A)= 2p=400] a profit maximization laul L! MR-MC S 20-400 =30 de PIA) = 215 QB = 420-125P total reconce for firm A = PQB = 420p-115p? MIR(A) = dîRBI DOB 101.4207381-15 1 = 28-280 at profft maximization -level w mia V MREME =>20-280 =) 30 PCB)-15

200 280 310 Graph of green informaties