There is only one pumpkin patch in town, and it is considering implementing a two-part tariff pricing scheme. The marginal cost of each pumpkin is MC = 2, and there are no fixed costs. Each person that visits the pumpkin patch has the following inverse demand for pumpkins: P = 10 - Q. Use this information to answer the following two questions. 11. How much profit (per customer) would the pumpkin patch earn if it must charge a single price for pumpkins with no admissions fee? a. $12 b. $16 c. $24 d. $25 e. $32 12. If the pumpkin patch adopts a two-part pricing scheme, how much should they charge per pumpkin (P) and how much should they charge for admission to maximize profits? a. P= $2; Admission = $32 b. P= $6; Admission = $16 c. P = $5; Admission = $20 d. P= $2; Admission = $16 e. P= $6; Admission = $24

There is only one pumpkin patch in town, and it is considering implementing a two-part tariff pricing scheme. The marginal cost of each pumpkin is MC = 2, and there are no fixed costs. Each person that visits the pumpkin patch has the following inverse demand for pumpkins: P = 10 - Q. Use this information to answer the following two questions. 11. How much profit (per customer) would the pumpkin patch earn if it must charge a single price for pumpkins with no admissions fee? a. $12 b. $16 c. $24 d. $25 e. $32 12. If the pumpkin patch adopts a two-part pricing scheme, how much should they charge per pumpkin (P) and how much should they charge for admission to maximize profits? a. P= $2; Admission = $32 b. P= $6; Admission = $16 c. P = $5; Admission = $20 d. P= $2; Admission = $16 e. P= $6; Admission = $24

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter25: Monopoly

Section: Chapter Questions

Problem 3E

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