Trick or Treat Candy Company has lots of customers, some of whom have an inverse demand p(y) : 160 – 10y while others have an inverse demand curve p(y) Hazel, does not know which customers are which until they buy. She knows that her marginal costs are constant at $25 per unit sold and that she would like to use quantity discounting. Is following price scheme incentive-compatible? If a customer purchase more than 9.5 units the price per unit is $72.50; otherwise, it is $92.50 per unit. Prove your assertion. 120 – 5y. Unfortunately, the owner,

Trick or Treat Candy Company has lots of customers, some of whom have an inverse demand p(y) : 160 – 10y while others have an inverse demand curve p(y) Hazel, does not know which customers are which until they buy. She knows that her marginal costs are constant at $25 per unit sold and that she would like to use quantity discounting. Is following price scheme incentive-compatible? If a customer purchase more than 9.5 units the price per unit is $72.50; otherwise, it is $92.50 per unit. Prove your assertion. 120 – 5y. Unfortunately, the owner,

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter9: Monopoly

Section: Chapter Questions

Problem 3SCQ: Suppose the local electrical utility, a legal monopoly based on economies of scale, was split into...

See similar textbooks

Similar questions

Your manager is only concerned with selling her product for the highest price possible under profit- maximizing conditions. In which of the two markets should she operate? • Market 1: - Demand:Q=100-2P - MarginalCost:MC=15 • Market 2: - Own-PriceElasticity:εQ,P=-2.5Note:Thisimpliestheown-priceelasticityis constant at all points. - MarginalCost:MC=15 a. She should operate in Market 1, as it has the highest profit-maximizing price. b. She should operate in Market 2, as it has the highest profit-maximizing price. c. She is indifferent, as each market has an equal profit-maximizing price.
Assuming you are the managing director of a firm that produces three goods: A, Band C. The price elasticity of demand for A is 1.2, for B it is 1.00 and for C it is 0.75.It is known that he firm is experiencing serious cash flow problems and you have toincrease total revenue as soon as possible. If you were in a position to set the pricesfor these goods, what would be your pricing strategy for each product
Suppose the own price elasticity of market demand for retail gasoline is -0.9, the Rothschild index is 0.6, and atypical gasoline retailer enjoys sales of $1, 200, 000annually. What is the price elasticity of demand for arepresentative gasoline retailer's product? Instruction:Enter your response rounded to two decimal places. Ifentering a negative number, be sure to use thenegative (-) sign.
(28). A firm that faces a high-demand period followed by a low-demand period must determine all of the following for peak-load pricing except which one? O A) long-term peak quantity O B) long-run capacity O C) short-term peak price O D) short-term off-peak price (29) The demand for Healthy Bars, a health snack bar, is Qd = 10 - (2 x P) and Healthy Bars has a constant average cost of $3 per snack bar. If Healthy Bars wants to package their bars to create an all-or-nothing offer and puts the profit-maximizing number of bars into each package, what is the profit-maximizing price to charge for the package? O A) $8 O B) $20 O C) $12 O D) $16
13: What is the Difference between predatory pricing, tie-in sales, and bundling? 14: At what Price should All Firms Produce at? 15: What should a Firm do for Pricing if it faces Elastic or Inelastic Demand?
Suppose the following data represent the market demand for catfish: Price (per unit) $20 19 18 17 16 15 14 13 12 11Quantity demanded (units per day) 12 13 14 15 16 17 18 19 20 21Total revenue — — — — — — — — — —Marginal revenue — — — — — — — — — —Compute total and marginal revenue to complete the table above. At what rate of output is total revenue maximized? At what rate of output is MR less than price? At what rate of output does MR first become negative? Graph the demand and MR curves.
1.i) Assuming you are the managing director of a firm that produces goods: A,B and C .The price elasticity of demand for A is 1.2, for B it is 1.oo and C is 0.75. It is known that he's firm is experiencing serious cash flow problems and you have to increase total revenue as soon as possible. If you were in a position to set the prices for these goods, what would be your pricing strategy for each product ii) price falls from N$ 16 to N$ 12 per bottle and demand rises from 200 to 300 per bottle.calculate the PED using midpoint formula Output prices average (total)cost Total cost marginal cost Total profit/loss 10 10 -108 20 10 4 -48 30 10 5 3 40 10 6.20 40 50 10 8 60 60 10 10 60 2. i) fill in the gaps ii)in which market structure doess Johnson Electronics (Pty)Ltd operate? iii)what level of output maximizes the firms profit
Suppose you are the economic adviser ofa company producing three brands of mobile pnones;Nokia 10, Samsung X and iPhone 7. Suppose further that, your company currently sells 120units of iPhone Z at e800 per unit, 150 units of Samsung X at e800 per unit and 200 units ofNokia 10 at e100 per unit, but in a bid to maximize profit, the company's managing directorproposes an increase in price of Samsung X from e800 to e1000 per unit for which quantitydemanded is anticipated to fall from 150 to 100 units; iPhone Z from e800 to e 1200 per unitfor which quantity demanded is anticipated to fall from 120 to 100 units; and Nokia 10 from100 to 200 per unit for which quantity demanded is expected to fall from 200 to 100 unitsUsing the mid-polint formula. compute the price elasticity of demand for each brand.From your answer in i, what is the type and economic interpretatiom of each brand'sii.value of elasticity.
Suppose that individual demand for a product is given byQd = 1000 – 5P. Marginal revenue, MR = 200 – 0.4Q, andmarginal cost is constant at $20. There are no fixed costs.a. The firm is considering a quantity discount. The first 400 unitscan be purchased at a price of $120, and further units can bepurchased at a price of $80. How many units with theconsumer buy in total?b. Show that this second-degree price-discrimination scheme ismore profitable than a single monopoly price.
1. TopGames buys the rights to sell a certain video game title worldwide. top games pay $400,000 for this right and the marginal cost of providing the video game download is zero. TopGames’ economist realizes they have two groups of customers: the 2,000 hard-core fans of this game who will pay up to $150 a year to be able to play this game; and the 10,000 casual gamers who will pay up to $50 a year to play this game. If TopGames can NOT price discriminate, what is its profit-maximizing price? What is its profit? a. Price = $50; Profit = negative $100,000 b. Price = $50; Profit = $300,000 c. Price = $150; Profit = $100,000 d. Price = $150; Profit = $500,0002. TopGames buys the rights to sell a certain video game title worldwide. top games pay $400,000 for this right and the marginal cost of providing the video game download is zero. TopGames’ economist realizes they have two groups of customers: the 2,000 hard-core fans of this game who will pay up to $150 a year to be able to play this…
Assume that a firm accepts the following price_demand relationship as being a realistic representation of its market: d=800-10p where p must be between $20 and$70 a. How many units can the firm sell at the $20 per-unit price? At the $70 per-unit price? b. By how many units does a $1 increase decrease demand? c. Which pricing alternative the business is considering maximizes revenue? Group of answer choices $40 $30 $50
It costs $250 to produce an X-Box. We are trying todetermine the selling price for the X-Box. Prices between$200 and $400 are under consideration, with demand forprices of $200, $250, $350, and $400 given below. SupposeMSFT earns $10 in profit for each game that an X-Boxowner purchases. Determine the optimal price andassociated profit for the case in which an average X-Boxowner buys 10 games. Console Price ($) Demand200 2.00E06250 1.20E06350 6.00E05400 2.00E05Unit cost $250