Micro Economics For Today
10th Edition
ISBN: 9781337613064
Author: Tucker, Irvin B.
Publisher: Cengage,
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Chapter 13, Problem 4SQ
To determine
The renting of telephones and providing of service.
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A profit-maximizing shop in a town has a constant marginal cost of $10 and can sell to two types of customers: students and non-students. The shop faces a demand by students given by QS = 50‒P and a demand by non-students given by QN = 190‒3P.
Which price would students pay under uniform pricing?
Which price would students pay if the seller could successfully engage in price discrimination?
Koji Incorporated produces high-end cameras. Its typical camera comes with an array of options. The company has a good brand name.
a. Koji distributes its cameras through independent dealers who are given exclusive distribution rights for their respective market areas. Discuss why it might make economic sense for Koji to grant its distributors exclusive territories.
b. Since Koji adopted this distribution system, it has experienced a double markup problem. What is a double markup problem?
c. Discuss how Koji might use a two-part pricing scheme to reduce the double markup problem. (Be sure to specify what the two-part pricing scheme would
entail.)
d. Describe one other method that Koji might use to address the double markup problem.
The single-price monopoly equilibrium is Pareto ineffcient and leads to a positive deadweight loss. However, monopolies also have certain benefits in terms of technical progress, innovation, unique products/services and fostering of entrepreneurship. Do you agreee with the view that monopolies should be heavily regulated by the government ? Or should governments intervene only as and when necessary ?
Chapter 13 Solutions
Micro Economics For Today
Ch. 13.2 - Prob. 1YTECh. 13.6 - Prob. 1.1YTECh. 13.6 - Prob. 1.2YTECh. 13 - Prob. 1SQPCh. 13 - Prob. 2SQPCh. 13 - Prob. 3SQPCh. 13 - Prob. 4SQPCh. 13 - Prob. 5SQPCh. 13 - Prob. 6SQPCh. 13 - Prob. 7SQP
Ch. 13 - Prob. 8SQPCh. 13 - Prob. 9SQPCh. 13 - Prob. 10SQPCh. 13 - Prob. 11SQPCh. 13 - Prob. 12SQPCh. 13 - Prob. 1SQCh. 13 - Prob. 2SQCh. 13 - Prob. 3SQCh. 13 - Prob. 4SQCh. 13 - Prob. 5SQCh. 13 - Prob. 6SQCh. 13 - Prob. 7SQCh. 13 - Prob. 8SQCh. 13 - Prob. 9SQCh. 13 - Prob. 10SQCh. 13 - Prob. 11SQCh. 13 - Prob. 12SQCh. 13 - Prob. 13SQCh. 13 - Prob. 14SQCh. 13 - Prob. 15SQCh. 13 - Prob. 16SQCh. 13 - Prob. 17SQCh. 13 - Prob. 18SQCh. 13 - Prob. 19SQCh. 13 - Prob. 20SQ
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- Amy Bob and Carry have the following reservation prices for goods X and Y Good X Good Y Amy 120 5 Bob 80 80 Carry 15 110 What are the optimal prices for Goods X and Y when they are sold separately? What is the profit with bure bundling costless production? Would mixed bundling improve upon pure bundling?arrow_forwardIs it possible to have a situation where a profit maximizing monopoly chooses to produce the same quantity as the one that would be produced under perfect competition: a) Yes, the monopoly always chooses to produce the same quantity as the one that wouldbe produced under perfect competitionb) Yes, under first-degree price discriminationc) Yes, under second-degree price discriminationd) Yes, under third-degree price discriminatione) None of the abovearrow_forwardAssume a market for petroleum products, and let D denote the demand of petroleum products while MC the marginal cost. The inverse demand is p = 100 - q, and the MC is MC = q.a. Use a figure to depict the competitive outcome assuming many producer and many consumers. Derive the competitive equilibrium outcome.b. Use a second figure to explain the monopoly solution assuming a single seller. Derive the monopoly solution.arrow_forward
- Monopoly Assume a market for petroleum products, and let D denote the demand of petroleum products while MC the marginal cost. The inverse demand is p = 10 - q, and the MC is MC = q. a. Use a figure to depict the competitive outcome assuming many producer and many consumers. Derive the competitive equilibrium outcome. b. Use a second figure to explain the monopoly solution assuming a single seller. Derive the monopoly solution.arrow_forwardAs monopoly, how much should MCDonalds chrage for its hamburguers to maximize profit according to the table.arrow_forwardAndrew Carnegie's monopoly in steel was never as complete as John D. Rockefeller's monopoly in oil. But even after the breakup of Standard Oil in 1914, monopolies kept developing -- including more "natural" monopolies such as Microsoft and Facebook. Why does the government of the USA continue to attempt to break up monopolies? What is the economic rationale? A. Monpolies are inherently anti-consumer. B. Monpolies are a natural consequence of technoogical innovation, and are seen by some economists as evidence of the superiority of capitalism because the market rewards competition. C. Monopolies are problematic because of price-fixing, which is achieved mainly after they become established, not because of the aggressive competition required to out-compete rivals before market dominance is achieved. D. All the above.arrow_forward
- Microsoft Windows 8 to Go on Sale in October. Microsoft announced that its Windows 8 operating system will be released in October 2012, three years after Windows 7 went public. Windows 8 will be available in 109 languages across 231 markets worldwide a. Is Microsoft a natural monopoly or a legal monopoly? b. Does Microsoft price discriminate or do the different prices of Windows reflect cost differences? c. Sketch a demand curve for Windows, Microsoft’s marginal cost curve, and the distribution of the total surplus between consumers and Microsoft.arrow_forwardSuperior Cable TV buys the right to provide an exclusive movie network (HBOW) in its province. Superior pays $300,000 a year for HBOW and the marginal cost of providing HBOW is zero. Superior's economist realizes they have two groups of customers: the 8,000 hard-core HBOW fans who will pay up to $300 a year for the exclusive network; and the 70,000 casual TV viewers who will pay up to $30 a year for HBOW. If Superior Cable TV can price discriminate, what is its maximum profit?arrow_forwarda monopoly faces the marginal cost schedule MC=1.1+0.01q and can price discriminate between two markets where p1=10-0.1q1 , p2=6-0.04q2 how much should it sell in each market to maximize profit, and at what prices?arrow_forward
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