The average consumer at a firm with market power has an inverse demand function of P 10 - 2G The firm's total cost function is C = 5Q. If the firm engages in two-part pricing, what is the optimal fixed fee to charge each consumer? Multiple Choice $3.25 $1.25 $6.25 $2.45
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- The average consumer at a firm with market power has an inverse demand function of P = 10 − Q. The firm's total cost function is C = 2Q. If the firm engages in two-part pricing, what is the optimal price to charge a consumer for each unit purchased? Multiple Choice $2 $0 $1 $4The average consumer at a firm with market power has an inverse demand function of P = 10 − Q . The firm's total cost function is C = 3Q. If the firm engages in two-part pricing, what is the optimal fixed fee to charge each consumer? a. $75.50 b. $32.50 c. $24.50 d. $64.50[Suppose] A Cmpany is the sole provider of electricity in the various districts of Dubai. To meet the monthly demand for electricity in these districts, which is given by the inverse demand function: P = 1,200 − 4Q, the company has set up two electric generating facilities: Q1 kilowatts are produced at facility 1 and Q2 kilowatts are produced at facility 2; where Q = Q1 + Q2. The costs of producing electricity at each facility are given by C1(Q1) = 8,000 + 6Q1 C2(Q2) = 6,000 + 3Q2 + 5Q22 What is the MR function? What is the MC function of each facility? What is the MC function of the firm?
- [Suppose] A Cmpany is the sole provider of electricity in the various districts of Dubai. To meet the monthly demand for electricity in these districts, which is given by the inverse demand function: P = 1,200 − 4Q, the company has set up two electric generating facilities: Q1 kilowatts are produced at facility 1 and Q2 kilowatts are produced at facility 2; where Q = Q1 + Q2. The costs of producing electricity at each facility are given by C1(Q1) = 8,000 + 6Q1 C2(Q2) = 6,000 + 3Q2 + 5Q22 Calculate the profit maximizing output levels of each factory? What is the profit maximizing level of price? What is the maximum profit?Suppose the total monthly demand for golf services is Q = 20 − P. The marginal cost to the firm of each round is $1. If this demand function is based on the individual demands of 10 golfers, what is the optimal two-part pricing strategy for this golf services firm? How much profit will the firm earn?At an amusement park with a “horror” roller coaster, management has estimated that the average visitor has a demand function P = 9 – (Q/3), where P is the average ride price and Q is the number ofof routes per visitor. The total cost to the average visitor is C = 1 + Q.Management is considering two pricing schemes. Either charge P per ride, or charge a general admission price that will allow the visitor to do as many rides as they want.(a) If management chooses per-ride pricing, what price will it charge and what will be the profit per visitor?(b) If he chooses a general entry price this will be such as to extract all of the surplus from each consumer. What will be the general admission price and profit per visitor?(hint: the general input price will be revenue P×Q + CS, where CS = 0.5×(9 – Ρ)×Q is the consumer surplus corresponding to the profit-maximizing quantity).
- Suppose an ocean-front hotel rents rooms. In the winter, demand is: P1=50−1Q1 with marginal revenue of: MR1=50−2Q1. However, in the summer, demand is: P2=140−1Q2 with marginal revenue of:: MR2=140−2Q2. Furthermore, suppose the hotel's marginal cost of providing rooms is MC=5+1Q, which is increasing in Q due to capacity constraints. Suppose the hotel engages in peak-load pricing. During the winter, the profit-maximizing price is $35 and the profit-maxizing quantity is 15 rooms. (Enter numeric responses rounded to two decimal places.) During the summer, the profit-maximizing price is $_____ and the profit-maximizing quantity is _________.Suppose an ocean-front hotel rents rooms. In the winter, demand is: P1=50−1Q1 with marginal revenue of: MR1=50−2Q1. However, in the summer, demand is: P2=140−1Q2 with marginal revenue of:: MR2=140−2Q2. Furthermore, suppose the hotel's marginal cost of providing rooms is MC=5+1Q, which is increasing in Q due to capacity constraints. Suppose the hotel engages in peak-load pricing. During the winter, the profit-maximizing price is $______and the profit-maxizing quantity is______rooms. (Enter numeric responses rounded to two decimal places.)Firms often price their products by “marking up” a fixed percentage over average cost. To investigate the consequences of markup pricing, consider a single firm that faces the demand Q = 90 − P, for P ≤ 90. The firm’s TOTAL cost function is C(Q) = 20Q. In this example, would a 50% markup lead to a more or less efficient outcome than the profit maximizing rule in part Q3.2? How do you define efficiency? Explain.
- A manager of a nightclub realizes that demand for drinks is more elastic among students and is trying to determine the optimal pricing schedule. Specifically, he estimates the following average demand for his customer types: Under 25: qr =18-5p Over 25: q=10-2p The two age groups visit the nightclub in equal numbers on average. Assume that drinks cost the club $2 to make. If the manager can charge a separate entry fee and a price per drink for each group, what two-part price will the manager set for reach group. Now suppose that once again it is impossible to identify which group the customers belong. Suppose the manager lowers the price of drinks to equal to marginal cost and still wanted to attract both customers, what entry fee would the manager set? Compare the profits earned in parts a) to d). Which scheme would you choose if you could not identify customer type and which would you choose if you could identify customer type.A firm with market power faces the demand function, q = 150 – 10P. The firm's marginal cost function is MC(q) = 2 + 0.1q. If the firm establishes a block-pricing structure with two prices, the lower price that the firm will use to maximize producer surplus is $____.Consider a duopoly with a leader (called L) and a follower (called F). The market demand is given as: P=500-0.25Q, where Q=QL+QF The total cost function for the leader is given as: TCL=0.03QL The total cost function for the follower is given as: TCF=0.1QF All variables are per day, per plant. What is the profit-maximizing quantity for the leader (per day, per plant)? (Note: Round your answer to two decimal points
