5. Exercise 4.5Roger is a regular consumer of personalized greeting cards with Hofmann photographs. Itsdemand curve is given by q = 31 -0.5P. Rogelio is a representative consumer of this typeof cards so we can assume that the rest of the customers, 1,000 in total, have the samedemand curve. The supplier company, Hofmann, can produce each card at a constantaverage and marginal cost of €2. In the market of personalized greeting cards there aremany other companies that offer very similar cards.Consider the following 4 scenarios:(i) Hofmann acts as a perfect competitor.ii) Hofmann acts as a monopolist.iii) Hofmann acts as a first-degree discriminator monopolistiv) Hofmann acts as a second-degree discriminator monopolist and offers each of itscustomers 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, for the 4 scenarios proposed, the surplus of the consumer, the surplus theproducer, represent graphically and indicate:a) Which scenario is the most favourable for consumers?b) Which scenario is the most favourable for Hofmann?c) Which scenario is the most favourable for consumers and Hofmann taken together?

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Roger is a regular consumer of personalized greeting cards with Hofmann photographs. Its demand curve is given by qd = 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.

Roger is a regular consumer of personalized greeting cards with Hofmann photographs. Its demand curve is given by qd = 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.

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter13: Factor Markets: With Emphasis On The Labor Market

Section: Chapter Questions

Problem 4QP: Compare the firms least-cost rule with how buyers allocate their consumption dollars.

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