A firm is originally operating as a single-price monopolist that faces a market demand curve ?(?)=190−1/6?and total cost curve equal toTC(Q)=30,500+42Q, with constant MC equal to ??(?)=42for all units produced. Part (a): How much output does the firm produce and at what price is each unit sold for? Part (b): Calculate the firm’s profit. The firm now realizes there are actually two distinct groups of consumers that purchase their product, with the following demand functions: ?(?1)=168−1/4?1 ?(?2)=234−1/2?2 Their total and marginal cost curves have not changed. If the firm wanted to successfully practice third-degree price discrimination: Part (c): How many units of output would they sell to group 1 and how much will each consumer in group 1 pay?
A firm is originally operating as a single-price monopolist that faces a market
Part (a): How much output does the firm produce and at what price is each unit sold for?
Part (b): Calculate the firm’s profit.
The firm now realizes there are actually two distinct groups of consumers that purchase their product, with the following demand functions:
?(?1)=168−1/4?1
?(?2)=234−1/2?2
Their total and marginal cost curves have not changed.
If the firm wanted to successfully practice third-degree
Part (c): How many units of output would they sell to group 1 and how much will each consumer in group 1 pay?
Part (d): How many units of output would they sell to group 2 and how much will each consumer in group 2 pay?
Part (e): How much profit is earned by the firm when they practice third-degree price discrimination?
Part (f): How much did profits rise by when the firm switched to using price discrimination?
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