Following information shows that a firm offering a good at different prices to groups of consumers with different levels of willingness to pay. Inverse Demand for movies: P1 = 20 – 4Q1 Inverse Demand for students: P2 = 10 – Q2 MC = 4Q LKR /ticket (a) What price and quantity and maximizes profits if the firm charges each market? (b) Demonstrate that charging
Following information shows that a firm offering a good at different prices to groups of consumers with different levels of willingness to pay. Inverse Demand for movies: P1 = 20 – 4Q1 Inverse Demand for students: P2 = 10 – Q2 MC = 4Q LKR /ticket (a) What price and quantity and maximizes profits if the firm charges each market? (b) Demonstrate that charging
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter9: Monopoly
Section: Chapter Questions
Problem 20SQ
Related questions
Question
Following information shows that a firm offering a good at different prices
to groups of consumers with different levels of
Inverse Demand for movies: P1 = 20 – 4Q1
Inverse Demand for students: P2 = 10 – Q2
MC = 4Q LKR /ticket
(a) What price and quantity and maximizes profits if the firm charges each
market?
(b) Demonstrate that charging different prices for the two groups results in
higher profits than charging the same price for everyone.
(c) Graph the demand curves, the marginal revenue curves, the marginal cost
curve and highlight the equilibrium.
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