BCY's demand is: P = 24,000 – 20Q, and BCY's marginal cost of service is: MC = 40Q. a. If BCY charges a uniform price for a unit of accounting service, Q, what price must it charge per unit, and how many units must it produce per time period in order to maximize profit? Calculate the consumer surplus. b. If BCY could enforce first-degree price discrimination, what would be the lowest price that it would charge and how many units would it produce per time period? c. With perfect price discrimination and ignoring any fixed cost, what is total profit and what is the amount of consumer surplus?
The BCY Corporation provides accounting services to a wide variety of customers, most of
whom have had a business association with BCY for more than five years.
BCY's demand is: P = 24,000 – 20Q, and BCY's marginal cost of service is: MC = 40Q.
a. If BCY charges a uniform price for a unit of accounting service, Q, what price must it
charge per unit, and how many units must it produce per time period in order to maximize
profit? Calculate the
b. If BCY could enforce first-degree
that it would charge and how many units would it produce per time period?
c. With perfect price discrimination and ignoring any fixed cost, what is total profit and
what is the amount of consumer surplus?
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