Question 2 (35 points): (3rd Degree Price Discrimination) Let there be a monopolist firm and two ...

Question

Question

Question 2 (35 points): (3rd Degree Price Discrimination) Let there be a monopolist firm and two groups of consumers. Suppose

Please answer clearly and explain.

business economics

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

i) Under first degree PD, each consumer is charged his / her willingness to pay. Total units sold is determined by P = MC. Here MC is 2 and P is 200 - 2Q2. Hence we have 200 - 2Q2 = 2 or Q2 = 99 units. Profits = Entire consumer surplus at 99 units = 0.5*(200 - 2)*99 = 9801

ii) Inelastic demand has a smaller slope and price coefficient. Price coefficient is -1 in 1st demand and -1/2 in second. Hence 1st demand is relatively elastic while the second demand is relatively inelastic.

Add a comment

Answer 2

Similar Homework Help Questions

Question 2 (35 points): (3rd Degree Price Discrimination) Let there be a monopolist firm and two ...

Please answer clearly and explain. Thank you! Question 2 (35 points): (3rd Degree Price Discrimination) Let there be a monopolist firm and two groups of consumers. Suppose that marginal cost is defined by MC- 2. The demand that each consumer receives is given by 1 50- P 2Q2- 200 - P2 i) (4 points) Consider the monopolist engages in first degree price discrimina- tion only in market 2. Compute the monopoly profit in this market. ii) (4 points) Which group...
QUESTION 5: THIRD DEGREE PRICE DISCRIMINATION (20pt) A monopolist engages in third degree price discrimination.There are...

QUESTION 5: THIRD DEGREE PRICE DISCRIMINATION (20pt) A monopolist engages in third degree price discrimination.There are 2 types of consumers, and the monopolist wants to sell to both groups. The monopolist is allowed to charge different prices and hence engages in third degree price discrimination. The demand curve for each group (the entire group) is as follows 01 500 10P Q2 200-5P2 The total cost function is TC 2000+10Q (a) What price does this firm charge to each group? (b)...
please help solve. Is this also 3rd degree price discrimination? A price-discriminating monopolist faces the following...

please help solve. Is this also 3rd degree price discrimination? A price-discriminating monopolist faces the following inverse demand functions: In Market One it is P1- 80-Q1 and in Market Two it is P2 60-Q2 Marginal cost is constant at $10. Consumers in market two can resell the good to consumers in market one at a cost of $4 per unit. Find the profit-maximizing quantity and price charged in each market subject to the resale constraint.

(3rd Degree Price Discrimination) A Monopolist selling a cell phone in two separate markets. They must...

(3rd Degree Price Discrimination) A Monopolist selling a cell phone in two separate markets. They must decide how much to sell in each market in order to maximize their total profits. The demand in the Brazilian Market is : QBrazil = 120 – 10PBrazil The demand in the United States Market is: QUSA = 60 – 20PUSA If Total Cost is: TC = 90 + 2(QUSA +QBrazil) Calculate the Price and Quantity if the Monopolist Maximized their profit...
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...
19 A monopolist engaging in third-degree price discrimination has lower profit than a monopolist engaging in...

19 A monopolist engaging in third-degree price discrimination has lower profit than a monopolist engaging in first-degree price discrimination creates a deadweight loss can identify with group of consumers any particular individual consumer belongs to can prevent arbitrage between different groups (or types) of consumers but not within groups of consumers. All of the above

Problem 1. Second Degree price discrimination Suppose all consumers are identical and market demand given by...

Problem 1. Second Degree price discrimination Suppose all consumers are identical and market demand given by p = 100-q. The monopoly's cost function is C(q) q2. (a) Suppose the monopolist cannot discriminate prices and must set a uniform price. Compute price and quantity set by the monopolist. Compute the profit of the monopoly. b) Suppose now that the monopoly can set a two-part tariff. Find the optimal two-part tariff. Compute the profit of the monopolist Problem 2. Third Degree price...
1) A monopolist firm sells its output in two regions: Califomia and Florida. The demand curves...

1) A monopolist firm sells its output in two regions: Califomia and Florida. The demand curves for each market are QF15-PF OF and Qc are measured in 1000s of units, so you may get decimal values for Q. If P-$10 and Q-1, the profit of S10 that you calculate is actually $10,000). Qc 12.5 - 2 Pc The monopoly's cost function is C 5+3Q5+3(QF+Qc) First, we'll assume that the monopoly can only charge one price in both markets. a) Calculate...
Action Systems is a monopolist that is the only seller of the world's most popular gaming...

Action Systems is a monopolist that is the only seller of the world's most popular gaming system. The following graph shows the market demand and marginal revenue curves Action Systems faces, as well as its marginal cost curve, which is constant at $40 per console. For simplicity, assume that fixed costs are equal to zero; this, combined with the fact that the firm's marginal cost (MC) is constant, means that its marginal cost curve is also equal to the average...

Perfect price discrimination a.increases profits to the firm. b.increases total surplus. c.decreases consumer surplus. d.All of...

Perfect price discrimination a.increases profits to the firm. b.increases total surplus. c.decreases consumer surplus. d.All of the above are correct. For a firm to price discriminate, a.it must be a natural monopoly. b.it must be regulated by the government. c.it must have some market power. d.consumers must tell the firm what they are willing to pay for the product. A monopoly's marginal cost will a.be less than its average fixed cost. b.be less than the price per unit of its...

Question 2 (35 points): (3rd Degree Price Discrimination) Let there be a monopolist firm and two ...

Homework Answers

Add Answer to:
Question 2 (35 points): (3rd Degree Price Discrimination) Let there be a monopolist firm and two ...

Post as a guest

Earn Coins