3. You are an internet service provider and you have two types of customers, households and businesses. Business demand for your service is Ab = 6500– 100p, and household demand is qh = 12500 – 500p. Your marginal cost is MC(q + qh) = 20/3 + ( + qn)/150. Calculate the profit maximising prices you should charge the two goups under market segmentation (ie. third degree price discrimination).

Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter14: Indirect Price Discrimination
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3. You are an internet service provider and you have two types of customers, households and businesses. Business demand for your service is
qb = 6500 – 100p, and household demand is q, = 12500 – 500p. Your marginal cost is MC( + qh) = 20/3 + (g + Ih)/150. Calculate the
profit maximising prices you should charge the two goups under market segmentation (ie. third degree price discrimination).
Transcribed Image Text:3. You are an internet service provider and you have two types of customers, households and businesses. Business demand for your service is qb = 6500 – 100p, and household demand is q, = 12500 – 500p. Your marginal cost is MC( + qh) = 20/3 + (g + Ih)/150. Calculate the profit maximising prices you should charge the two goups under market segmentation (ie. third degree price discrimination).
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