managerial economics

Display all calculations and briefly explain your answers.
Question2
A monopolist produces a unique product with constant marginal cost of production equal to zero, and zero fixed costs. There are two types of consumers who would purchase output from the monopolist, with demand given by the following linear demand curves:
Consumer A: p= 40 – 10qa
Consumer B: p= 70 – 7qb

a)Suppose the monopolist can distinguish between the two types of consumers, but is only allowed to charge a per-unit price to consumers (i.e.: the monopolist cannot charge a fixed fee or membership fee). What prices pa and pb will the monopolist charge to the type A and B consumers to maximizes profits? What quantity is purchased by each type of consumer?

b)Now suppose the monopolist can charge a membership fee to consumers for the right to purchase output. What is the per-unit price pa and pb, and the membership fee Aa and Ab, which maximizes profits? What quantity is purchase by each type of consumer?

c)Now suppose the monopolist cannot distinguish bet different types of consumers (he can still use a two-part tariff). To get around this problem, the monopolist only allows consumers to buy in fixed quantities, either qy units of output or qz units of output. What are qy and qz equal to? How much does the monopolist charge to a consumer who wants to buy qy units of output? How much does the monopolist charge to a consumer who wants to buy qz units of output?

managerial economics

sennachan

Joined September 2008

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