a demand given by Qs = 4000 - 100P. The marginal cost of one more alteration is constant and al to zero. (a) (b) What is the value of each demand's elasticity at the optimal price level? (c) What is the total consumer surplus (for both groups)? (d) Suppose that a regulation prohibits price discrimination. What is the optimal (uniform) price when the markets are combined? How much does the regulation cost the tailor in terms of forgone profits? (e) What happens to consumer surplus? Suppose that the tailor can charge different prices to each type of customer. What are the optimal prices? What is the total profit?

a demand given by Qs = 4000 - 100P. The marginal cost of one more alteration is constant and al to zero. (a) (b) What is the value of each demand's elasticity at the optimal price level? (c) What is the total consumer surplus (for both groups)? (d) Suppose that a regulation prohibits price discrimination. What is the optimal (uniform) price when the markets are combined? How much does the regulation cost the tailor in terms of forgone profits? (e) What happens to consumer surplus? Suppose that the tailor can charge different prices to each type of customer. What are the optimal prices? What is the total profit?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter3: Demand Analysis

Section: Chapter Questions

Problem 9E

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