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).
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
Section: Chapter Questions
Problem 14.6IP
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