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Economics (MindTap Course List)
Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter23: Monopoly
Section23.5: Price Discrimination
Problem 2ST
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A numerical look at deadweight loss from monopoly
Transcribed Image Text:A numerical look at deadweight loss from monopoly
For each quantity of tutoring sessions she could give, fill in the Total Revenue column in the following table with the most total revenue she could earn at each quantity of sessions. Then, complete the table by computing the marginal revenue at each quantity of tutoring sessions. Students (Sessions per week) 0 1 2 3 4 5 6 7 8 9 Willingness to Pay (Dollars per tutoring session) 40 38 36 34 32 30 28 26 24 Total Revenue (Dollars per week) 0 40 76 108 136 160 180 196 208 216 If Frances can practice perfect price discrimination, she should give Marginal Revenue (Dollars per tutoring session) If Frances has to charge a single price to all of her students, she will maximize her profit by giving efficient number, which is tutoring sessions. tutoring sessions. 40 36 32 28 24 20 16 12 8 tutoring sessions. This is than the Now suppose Frances cannot practice perfect price discrimination, but she is able to find a hurdle that identifies the group of students who are willing to pay at least $34 for a tutoring session (the "list price" submarket), and those who are not (the "discount price" submarket). In order to maximize her profit under this pricing scheme, she should charge in the list price submarket and in the discount price submarket.
Transcribed Image Text:For each quantity of tutoring sessions she could give, fill in the Total Revenue column in the following table with the most total revenue she could earn at each quantity of sessions. Then, complete the table by computing the marginal revenue at each quantity of tutoring sessions. Students (Sessions per week) 0 1 2 3 4 5 6 7 8 9 Willingness to Pay (Dollars per tutoring session) 40 38 36 34 32 30 28 26 24 Total Revenue (Dollars per week) 0 40 76 108 136 160 180 196 208 216 If Frances can practice perfect price discrimination, she should give Marginal Revenue (Dollars per tutoring session) If Frances has to charge a single price to all of her students, she will maximize her profit by giving efficient number, which is tutoring sessions. tutoring sessions. 40 36 32 28 24 20 16 12 8 tutoring sessions. This is than the Now suppose Frances cannot practice perfect price discrimination, but she is able to find a hurdle that identifies the group of students who are willing to pay at least $34 for a tutoring session (the "list price" submarket), and those who are not (the "discount price" submarket). In order to maximize her profit under this pricing scheme, she should charge in the list price submarket and in the discount price submarket.
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