Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
9th Edition
ISBN: 9781259290619
Author: Michael Baye, Jeff Prince
Publisher: McGraw-Hill Education
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Question
Chapter 11, Problem 6CACQ
(A)
To determine
The optimal number of units to put in a package is to be ascertained.
(B)
To determine
Price that the firm would charge for this package is to be calculated.
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A monopoly is considering selling several units of a homogeneous product as a single package. A typical consumer’s demand for the product is Qd = 50 - 0.25P, and the marginal cost of production is $120.
Determine the optimal number of units to put in a package.
How much should the firm charge for this package?
A monopoly is considering selling several units of a homogeneous product as a single package. A typical consumer’s demand for the product is Qd = 80 − 0.5P, and the marginal cost of production is $100. a. Determine the optimal number of units to put in a package. b. How much should the firm charge for this package?
A monopoly is considering selling several units of a homogeneous product as a single package. A typical consumer’s demand for the product is Qd = 100 - 0.25P, and the marginal cost of production is $140.a. Determine the optimal number of units to put in a package. unitsb. How much should the firm charge for this package?$
Chapter 11 Solutions
Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
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- A monopoly is considering selling several units of a homogeneous product as a single package. Analysts at your firm have determined that a typical consumer’s demand for the product is Qd = 60 − 0.25P, and the marginal cost of production is $80.a. Determine the optimal number of units to put in a package. units b. How much should the firm charge for this package? $arrow_forwardA monopoly is considering selling several units of a homogeneous product as a single package. A typical consumer's demand for the product is Qd=90-0.5P, and the marginal cost of production is $110. a. Determine the optimal number of units to put in a package. b. How much should the firm charge for this package?arrow_forwardA monopoly is considering selling several units of a homogeneous product as a single package. Analysts at your firm have determined that a typical consumer’s demand for the product is Qd = 100 − 0.25P, and the marginal cost of production is $140. a. Determine the optimal number of units to put in a package. b. How much should the firm charge for this package?arrow_forward
- Assume a monopoly has two groups of customers, and each group of customers has different demand for the firm's product. Group A's demand is: Pa = 90 - .1qa where qa is group A's quantity demanded and Pa is the commodity's price in dollars for group A customers. Group B's demand is: Pb = 170 - .2qb where qb is group B's quantity demanded and Pb is the commodity's price in dollars for group B customers. The firm's total cost curve is: TC = 30,000 + .05q2 where TC is the firm's total cost in dollars and q is the total quantity of output produced by the firm. Based upon the above equations, answer the following questions: a. What quantity of the commodity would the firm sell to customers in group B? What price would the firm establish for customers in group B? b. What quantity of the commodity would the firm sell to customers in group A? What price would the firm establish for customers in group A?arrow_forwardSuppose a monopoly firm has an annual demand function of Qd = 20,000 - 250P, annual variable costs of VC = 16Q + 0.002Q2 and marginal cost of MC = 16 + 0.004Q, where Q is the annual quantity of output. In addition, the firm has an avoidable fixed cost of $25,000 per year. If this firm maximizes its profit, what is the value of the consumer surplus in the market?arrow_forwardSuppose a firm can invent a new product. That firm is the only entity in the world that can invent the product. Doing so incurs a research cost of r to be paid once in the first period. The monopoly price for this new product is 6$ per unit and the firm’s production cost after doing the research in (q^2)/2 where q is the quantity of the good produced.Time is discrete and the firm faces the same price and cost function every period. Without a patent, other firms enter the market and those firms can produce the product more efficiently, therefore without a patent, the firm makes zero profit.1) What is the value for the firm of a patent with infinite duration? Assume a discount factor b = 0. 9.2) Suppose that there is no possibility for the firm of keeping a trade secret. The research cost for that good is 30$. The government can create a patent for the good before the firm has to make a research decision. The terms of the patent cannot be changed after its creation. What is the duration…arrow_forward
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