A downtown bar serves a drink that UCSB students love. The profit-maximizing owner knows that any given student has a demand for drink given by p= 14 -q and a non-student has demand p = 6- q. Because the bar can't identify whether a customer is a student, she decides to sell drinks in packages. She offers a large package of 12 drinks and a small package of 4 drinks, and each student is only allowed to buy one package. Resales are strictly prohibited. The bar's marginal cost is 2. If both packages are offered and priced optimally, what is the minimum surplus students must get from the large package in order to not want to buy the small package? O a. 64 O b. 32 O C. 26 O d. 80
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- A firm faces two types of consumers. Consumer A has an inverse demand of P = 120-10 Q and consumer B has an inverse demand of P = 60-2Q. The firm has a constant marginal cost of $20. Assume the firm does not know which type a given consumer is. She offers to sell the good at a price of 70$ per unit. However, if the customer buys 10 or more units, she will offer a quantity discount and charge only 40$ per unit (including the first 10). Which consumer will use the price discount? Question 7 options: Neither costumer will purchase from this firm at all. Customer A will choose the quantity discount and customer B will not choose the quantity discount. Both consumers will chose the quantity discount. Neither of the two consumers will opt for the quantity discount. Instead, both will purchase at the higher price of 70 and buy less than 10 units each. Customer B will choose the quantity…There are two types of consumers in Melbourne: students and non-students. The student population is 10, and each student’s demand of printing paper is Q=1−P, for P<1.The non-student population is 40, and each non-student’s demand of printing paper is Q=3−P, for P<3. Suppose OfficeMax is the only seller of printing paper in Melbourne. Assume zero production cost. Suppose OfficeMax cannot offer student discounts, and every customer has to pay the same price P. Derive the aggregate demand curve (for both students and non-students), and illustrate it in a diagram.A decorator, who is a monopolist, makes two types of specialty picture frames. From experience, the decorator has determined that if x frames of the first type and y frames of the second type are made and put on sale in a showroom, they can be sold for (100 - 2x) dollars and (120 - 3y) dollars each, respectively. The total cost of constructing these frames is (12x + 12y + 4xy) dollars. How many frames of each type should be produced to realize the maximum profit. and what is the maximum profit? Make sure to verify that this is indeed a maximum.
- A manager of a nightclub realizes that demand for drinks is more elastic among students and is trying to determine the optimal pricing schedule. Specifically, he estimates the following average demand for his customer types: Under 25: q^r=18-5pOver 25: q=10-2p The two age groups visit the nightclub in equal numbers on average. Assume that drinks cost the club $2 to make. A) suppose that once again it is impossible to identify which group the customers belong. Suppose the manager lowers the price of drinks to equal to marginal cost and still wanted to attract both customers, what entry fee would the manager set?There are two types of consumers in Melbourne: students and non-students. The student population is 10, and each student's demand of printing paper is Qs, = 1-p, for p<1. The non-student population is 40, and each non-student's demand of printing paper is Qa =3-p. for p <3. Suppose OfficeMax is the only seller of printing paper in Melboume Assume zero production cost. a. Suppose OfficeMax cannot offer student discounts, and every customer has to pay the same price p. Derive the aggregate demand curve (for both students and non-students), and illustrate it in a diagram. b. Suppose OfficeMax does not offer student discounts, and every customer pays the same price p. What is the profit maximizing price? In a diagram, illustrate the profit as a function of p and indicate the profit maximizing price. c. Given the optimal price in part a, compute the consumer surplus for students, consumer surplus for non-students, and producer surplus.The market for widgets is characterized by many buyers but only two producers, A and B. The market demand for widgets is given by: P = 500 − 10QD where QD = total demand for widgets Both producers face the same production cost, which is $120 in fixed cost and a constant variable cost of $20 per widget. Determine the profit-maximizing levels of output by producers A and B if they both choose the quantity of widgets produced simultaneously. What is the profit for each producer? If both producers collude, what is the equilibrium price and quantity? What is the profit for each producer? (You can assume the firms will share the market equally). Compare your answers to parts (a) and (b). Which outcome (collusive or non-collusive) would the producers prefer? Explain. Which outcome (collusive or non-collusive) is a more stable outcome? Explain. Note: Be sure to show your work.
- There are two types of consumers in Melbourne: students and non-students. The student population is 10, and each student’s demand of printing paper is Q=1−?, for ?<1.The non-student population is 40, and each non-student’sdemand of printing paper is Q=3−?, for ?<3. Suppose OfficeMax is the only seller of printing paper in Melbourne. Assume zero production cost. Suppose OfficeMax offers a student discount, d, so students only pay d*p and non-students pay the full price, p. What are the profit maximizing price and discount d?In a small college town there is only one movie theater. In a given month, if the theater is open, the owners have to pay a fixed amount of $6,000 for the films, ushers, etc., regardless of how many people come to the movies. For simplicity, assume that if the theater is closed, its costs are zero. The demand function for movie tickets in the town is characterized by ??= 45−QT/60 a. Find the profit-maximizing price and quantity of movie tickets, and indicate them on the graph above. How much would the theater make in profits? b. Suppose the local government implements a property tax, so that each month the theater now must pay a lump sum tax of $700. What will be the price and quantity of movie tickets under this tax?There are two types of consumers in Melbourne: students and non-students. The student population is 10, and each student’s demand of printing paper is Q=1−p, for p<1.The non-student population is 40, and each non-student’s demand of printing paper is Q=3−p, for p<3. Suppose OfficeMax is the only seller of printing paper in Melbourne. Assume zero production cost. Suppose OfficeMax offers a student discount, $1, so students only pay $0.50 and non-students pay the full price, $1.50. What is the deadweight loss in this situation? What is the deadweight loss if there was no discount and both students and non-students share an optimal price of $1.30?
- There are two types of consumers in Melbourne: students and non-students. The student population is 10, and each student's demand of printing paper is Qs, = 1-p, for p<1. The non-student population is 40, and each non-student's demand of printing paper is Qa =3-p. for p <3. Suppose OfficeMax is the only seller of printing paper in Melboume Assume zero production cost. a. Suppose OfficeMax offers a student discount, d, so students only pay d*p and non-students pay the full price, What are the profit maximizing price p and discount d? b. Suppose OfficeMax cannot offer student discounts, and every customer has to pay the same price p. What is the total demand if p 1.5? What is the total demand if p=0.5? c. Suppose OfficeMax cannot offer student discounts, and every customer has to pay the same price p. Derive the aggregate demand curve (for both students and non-students), and illustrate it in a diagram.There are two types of consumers in Melbourne: students and non-students. The student population is 10, and each student's demand of printing paper is Qs, = 1-p, for p<1. The non-student population is 40, and each non-student's demand of printing paper is Qa =3-p. for p <3. Suppose OfficeMax is the only seller of printing paper in Melboume Assume zero production cost. a. Suppose OfficeMax offers a student discount, d, so students only pay d*p and non-students pay the full price, What are the profit maximizing price p and discount d? b. What is the deadweight loss in Question 2.1? What is the deadweight loss in part a? c. The monopolist OfficeMax claims that the student discount improves social welfare Is it true? Explain why it is (not) trueAs a manager of a chain of movie theaters that are monopolies in their respective markets, you have noticed much higher demand on weekends than during the week. You therefore conducted a study that has revealed two different demand curves at your movie theaters. On weekends, the inverse demand function is P = 20 - 0.001Q; on weekdays, it is P = 15 - 0.002Q. You acquire legal rights from movie producers to show their films at a cost of $25,000 per movie, plus a $2.50 "royalty" for each moviegoer entering your theaters (the average moviegoer in your market watches a movie only once). What price should you charge on weekends? What price should you charge on weekdays?