Suppose that you are a manager for MegaAccounting corporation, a firm specializing in accounting software. You...
Suppose that you are a manager for MegaAccounting corporation, a firm specializing in accounting software. You know that you have two types of clients who use your software. Type A's inverse demand function is given by p=40-6q and type B's inverse demand function is given by p=37-11q. Your firm faces a constant marginal cost curve at $20
Suppose you can prevent buyers from trading with each other. What would be the price you would set in market A
Homework Answers
Type A ( Market A)
p = 40 - 6q
TR = pq
= (40 - 6q)q
= 40q - 6q2
dTR/dq = MR = 40 - 12q
MR = 40 - 12q
Since buyer are preventing from trading with each other thus, manager will charge price according to MR = MC
40 - 12q = 20
40 - 20 = 12q
20 = 12q
q = 20/12
= 5/3
p = 40 - 6(5/3)
= 40 - 10
= 30
thus, price that will be charged in market A is 30
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