6. What is peak load pricing? Suppose that an electric utility has a constant price so...
Which of the following statements is correct regarding the peak-load pricing strategy? The off-peak price and off-peak quantity are both higher than the peak price and peak quantity. The peak price and peak quantity are both higher than the off-peak price and off-peak quantity. The peak price is lower than the off-peak price, but the peak quantity is higher than the off-peak quantity. The peak price is higher than the off-peak price, but the peak quantity is lower than the...
Problem 2A This problem is an example on peak load pricing. The basic premise is that the demand for many goods and services exhibits temporal variation—e.g., demand for transit services is greatest in the morning and evening hours. Since these temporal differences in demand are coupled with a capacity that does not change, firms facing these demand conditions should charge different prices in the demand peak and trough. Assume that an electric utility faces a demand curve of the form...
How do marketers customize pricing with price segmentation, peak load pricing, and surge pricing? What are some ways marketers can price to meet the needs of bottom-of-the pyramid customers?
(a) Graphically illustrate and explain a firm engaging in intertemporal price discrimination. 7. (b) Graphically illustrate and explain a firm engaging in peak-load pricing. (c) A monopolist firm faces a demand with constant elasticity of -2.0. It has a constant marginal cost of $20 per unit and sets a price to maximize profit. If marginal cost increases by 25%, what would be the change in price level?
(a) Graphically illustrate and explain a firm engaging in intertemporal price discrimination. 7....
A firm charges $40 per unit for the first three units of a good purchased, and $20 for each additional unit thereafter. The firm’s marginal cost and average total cost are both constant at $15. A consumer purchases six units. How much profit will the firm earn? Group of answer choices $70 $110 $90 $80 $50 2. Suppose there are two types of consumers for cell phones and accessories (cases, extra chargers, etc.) Consumers of type A are willing to...
Suppose that after graduating from college with an economics degree, you get a job with your state’s public utilities commission. Your job is to determine the regulated price for an electric utility (a natural monopoly). The figure below shows the current situation in the market. 1st attemptPart 1 (1 point)See HintIf the electric utility was unregulated, it would earn $ in economic profits. Part 2 (1 point)See HintIf you set a regulated price to achieve economic efficiency, the electric utility would earn $ .Part 3 (1 point)See HintIf the electric utility is...
We've always treated bond pricing as if we have a constant return. We know that cash flows given at different times are discounted slightly differently when we think about the yield curve. Let's go through bond pricing utilizing the information gained from our yield curve. Suppose I have the following bond prices. Assume these are zero coupon bonds with a par value of $1000 Time To Maturity Price $958.23 1 yr 2 yr $931.12 $815.20 3 yr 4 уг 5...
What is limit pricing? a. Suppose your firm produces a product at a constant marginal cost equal to $1. Suppose the elasticity of demand is -3. What is the profit maximizing price if one ignores the possibility of entry? b. suppose at the above price economic profits are quite large. So your firm can expect entry. Assume that if one firm enters it would increase the elasticity of demand from -3 to -4. while if 2 firm enter it would...
Suppose the government chooses to provide a public good at a zero price, and the increased consumption makes it so that one person’s use begins to interfere with others’ use. Think of a crowded road or a crowded park. What should the government do now to keep this market efficient? A) Stop providing the good. B) Close the goods to users at peak demand times. C) Pay consumers to use the good. D)Add prices that reflect the costs of an...
Suppose the government wishes to tax a utility maximizing consumer to obtain a certain amount of tax revenue. A utility maximizing consumer has utility function u(x,y)= square root(x+y). The price of x is $1, the price of y is $4 and the consumers income is $120. a) Suppose the government imposes sales tax t=1 on good x per unit. What is the optimal consumption for good x and good y for the consumer under the sales tax? What is the...