You are the manager of a monopoly that sells a product to two groups of consumers in different parts of the country. Group 1’s elasticity of demand is -5, while group 2’s is -6. Your marginal cost of producing the product is $20. a. Determine your optimal markups and prices under third-degree price discrimination. Instructions: Enter your responses rounded to two decimal places. Markup for group 1: Price for group 1: $ Markup for group 2: Price for group 2: $ b. Which of the following are necessary conditions for third-degree price discrimination to enhance profits. Instructions: You must make a selection for each option. For correct answer(s), place a check mark. For incorrect answer(s), leave an empty box. check all that apply At least one group has elasticity of demand less than one in absolute value.unanswered At least one group has elasticity of demand greater than 1 in absolute value.unanswered We are able to prevent resale between the groups.unanswered There are two different groups with different (and identifiable) elasticities of demand.
You are the manager of a monopoly that sells a product to two groups of consumers in different parts of the country. Group 1’s elasticity of demand is -5, while group 2’s is -6. Your marginal cost of producing the product is $20. a. Determine your optimal markups and prices under third-degree price discrimination. Instructions: Enter your responses rounded to two decimal places. Markup for group 1: Price for group 1: $ Markup for group 2: Price for group 2: $ b. Which of the following are necessary conditions for third-degree price discrimination to enhance profits. Instructions: You must make a selection for each option. For correct answer(s), place a check mark. For incorrect answer(s), leave an empty box. check all that apply At least one group has elasticity of demand less than one in absolute value.unanswered At least one group has elasticity of demand greater than 1 in absolute value.unanswered We are able to prevent resale between the groups.unanswered There are two different groups with different (and identifiable) elasticities of demand.
Chapter14: Monopoly
Section: Chapter Questions
Problem 14.7P
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Question
You are the manager of a
a. Determine your optimal markups and prices under third-degree
Instructions: Enter your responses rounded to two decimal places.
Markup for group 1:
Price for group 1: $
Markup for group 2:
Price for group 2: $
b. Which of the following are necessary conditions for third-degree price discrimination to enhance profits.
Instructions: You must make a selection for each option. For correct answer(s), place a check mark. For incorrect answer(s), leave an empty box.
check all that apply
- At least one group has elasticity of demand less than one in absolute value.unanswered
- At least one group has elasticity of demand greater than 1 in absolute value.unanswered
- We are able to prevent resale between the groups.unanswered
- There are two different groups with different (and identifiable) elasticities of demand.
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