Roger is a regular consumer of personalized greeting cards with Hofmann photographs. Its demand curve is given by q = 31 -0.5P. Rogelio is a representative consumer of this type of cards so we can assume that the rest of the customers, 1,000 in total, have the same demand curve. The supplier company, Hofmann, can produce each card at a constant average and marginal cost of €2. In the market of personalized greeting cards there are many other companies that offer very similar cards. Consider the following the scenario: iv) Hofmann acts as a second-degree discriminator monopolist and offers each of its customers the possibility to buy the first 15 cards at a unit price of € 32, the next 5 (from € 16 to 20) at a unit price of € 22 and the following 10 (from € 21 to 30) at a unit price of €2. Calculate the surplus of the consumer, the surplus the producer and represent graphically
Exercise 4.5
Roger is a regular consumer of personalized greeting cards with Hofmann photographs. Its
Consider the following the scenario:
iv) Hofmann acts as a second-degree discriminator monopolist and offers each of its customers the possibility to buy the first 15 cards at a unit price of € 32, the next 5 (from € 16 to 20) at a unit price of € 22 and the following 10 (from € 21 to 30) at a unit price of €2.
Calculate the surplus of the
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
