Suppose the demand functions facing the wireless telephone monopolist in Worked-Out Problem 18.4 (page 647) are Q = 50 – 100P for each low-demand consumer and = 120 – 100P for each high-demand consumer, where Pis the per-minute price in dollars. The marginal cost is $0.20 per minute. Suppose the monopolist offers only a single two-part tariff. Instructions: Round your answers to 2 decimal places as needed. a. What will be the monopolist's profit from each type of consumer if it charges a per-minute price of $0.20 and a fixed fee that causes both types of consumers to make a purchase? Profitlow= $ 4.5 Profithigh = $ 4.5 b. What if it charges a per-minute price of $0.40? Profitiow= $ .5 Profithigh = $ 32 8 c. If there are 100 high-demand consumers, how many low-demand consumers can there be for the monopolist to find the $0.40 price more attractive than the $0.20 price? low-demand consumers.
Suppose the demand functions facing the wireless telephone monopolist in Worked-Out Problem 18.4 (page 647) are Q = 50 – 100P for each low-demand consumer and = 120 – 100P for each high-demand consumer, where Pis the per-minute price in dollars. The marginal cost is $0.20 per minute. Suppose the monopolist offers only a single two-part tariff. Instructions: Round your answers to 2 decimal places as needed. a. What will be the monopolist's profit from each type of consumer if it charges a per-minute price of $0.20 and a fixed fee that causes both types of consumers to make a purchase? Profitlow= $ 4.5 Profithigh = $ 4.5 b. What if it charges a per-minute price of $0.40? Profitiow= $ .5 Profithigh = $ 32 8 c. If there are 100 high-demand consumers, how many low-demand consumers can there be for the monopolist to find the $0.40 price more attractive than the $0.20 price? low-demand consumers.
Chapter14: Monopoly
Section: Chapter Questions
Problem 14.6P
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Transcribed Image Text:Suppose the demand functions facing the wireless telephone monopolist in Worked-Out Problem 18.4 (page 647) are
= 50 – 100P
for each low-demand consumer and
= 120 – 100P
for each high-demand consumer, where Pis the per-minute price in dollars. The marginal cost is $0.20 per minute. Suppose the
monopolist offers only a single two-part tariff.
Instructions: Round your answers to 2 decimal places as needed.
a. What will be the monopolist's profit from each type of consumer if it charges a per-minute price of $0.20 and a fixed fee that causes
both types of consumers to make a purchase?
Profitlow= $
4.5 O
Profithigh = $
4.5
b. What if it charges a per-minute price of $0.40?
Profitlow= $
.5
Profithigh = $
32 &
c. If there are 100 high-demand consumers, how many low-demand consumers can there be for the monopolist to find the $0.40 price
more attractive than the $0.20 price?
low-demand consumers.
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