The demand function for iPhone is Q(p) = 100 – P and the cost function is...

The demand function for iPhone is Q(p) = 100 – P and the cost function is C(Q) = 5Q. Apple initially sets the price of iPhone to be p1; after one-year Apple lowers the price to p2. Suppose the price decrease is not anticipated by the consumers. The number of consumers buying the iPhone at p1 is q1, and the amount buying at p2 is q2, where q1=Q(p1) and q1+q2=Q(p2). Find the profit-maximizing p1 and p2 and the corresponding q1 and q2 as well as the consumer’s surplus and Apple’s profit. This is form of second-degree price discrimination.

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Rahul Sunny answered 1 year ago

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