Question
In: Economics
Question: You are selling two goods, 1 and 2, to a market consisting of three consumers...
Question: You are selling two goods, 1 and 2, to a market consisting of three consumers with reservation pr...
You are selling two goods, 1 and 2, to a market consisting of three
consumers with reservation prices as follows:
Consumer For 1 For 2
A 20 4
B 12 12
C 4 20
The unit cost of each product is $6.
Compute the optimal prices and profits for
(i) selling the goods separately,
(ii) pure bundling, and
(iii) mixed bundling.
Price 1 Price 2 Bundled Price Profit
Sell Separately $20 $20 — $28
Pure Bundling — — $24 $36
Mixed Bundling $19 $19 $24 $38 ???????Why MIxed bunding is 19? ?????? how do you get 19???????
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
Suppose there are two consumers, A and B, and two goods, X and Y. The consumers...
Suppose there are two consumers, A and B, and two goods, X and
Y. The consumers have the following initial endowments and utility
functions:
W X A = 2 W Y A = 9 U A ( X , Y ) = X 1 3 Y 2 3 W X B = 6 W Y B
= 2 U B ( X , Y ) = 3 X + 4 Y
Suppose the price of X is PX=2 and the...
Suppose that for consumers A and B trading goods 1 and 2 in a general equilibrium...
Suppose that for consumers A and B trading
goods 1 and 2 in a general equilibrium
framework
uaxa,1,xa,2=xa,1∙xa,2
and
ubxb,1,xb,2=xb,1+2xb,2
The initial endowments are given by
ωa=(2,2) and
ωb=(3,2) . Depict graphically the
Edgeworth box including
Its dimensions
The location of the initial endowment
Each consumer’s indifference curves.
Note that in part (c), I just looking
for you to depict the general shape of these indifference curves;
you do not have to plot them out using the mathematical
functions.
Consider a market with two firms selling homogenous goods. Let the inverse demand curve be ?...
Consider a market with two firms selling homogenous goods. Let
the inverse demand curve be ? =
1210 − 2(?1 + ?2) where p denotes market price and q1, q2
denotes output quantity from firm 1 and
2 respectively. The firms have identical constant marginal
costs; c = 10.
Assume first that the firms compete ala Cournot:
a) Derive best response functions and illustrate equilibrium
in a diagram
b) Derive equilibrium quantities and prices
c) Compute profit for each firm....
You are considering three investments. The first is a bond that is selling in the market...
You are considering three investments. The first is a bond that
is selling in the market at $1,200. The bond has a $1,000 par
value, pays interest semi-annually at 10%, and is scheduled to
mature in 10 years. For bonds of this risk class you believe that a
12% rate of return should be required. The second investment that
you are analysing is a preference share ($100 par value) that sells
for $95 and pays an annual dividend of $10....
You are considering three investments. The first is a bond that is selling in the market...
You are considering three investments. The first is a bond that
is selling in the market at $1 200. The bond has a $1 000 par
value, pays interest at 8% and is scheduled to mature in 10 years.
For bonds of this risk class you believe that a 9% rate of return
should be required.
The second investment that you are
analyzing is a preferred stock ($125 par value) that sells for $120
and pays an annual dividend of...
Consider a perfectly competitive market in good x consisting of 250 consumers with utility function: ...
Consider a perfectly competitive market in good x consisting of
250 consumers with utility function:
u(x,y)
= xy
Denote Px to be the price
for good x and suppose Py = 1. Each consumer has income
equal to 10. There are 100 firms producing good x according to the
cost function c(x) = x2 + 1.
Derive the demand curve for good x for a constant in the
market
Derive the market demand curve for good x
Derive the...
Question 2: Firm Competitions Two firms, Firm 1 and Firm 2, produce the same goods and...
Question 2: Firm Competitions
Two firms, Firm 1 and Firm 2, produce the same goods and are
competing in the same market. Firm 1 has a cost function of c1 =
20q1 and Firm 2 has a cost function of
c2 = 10q2.
The market price is determined by the inverse demand function
p=100−q1 −q2
(a) Suppose Firm 1 and Firm 2 compete in a quantity competition.
And suppose both firms decidesimultaneously. What are the
Cournot-Nash equilibrium quantities of Firm...
Questions 6 through 10 refer to an exchange economy consisting of two consumers: Agnieszka (A) and...
Questions 6 through 10 refer to an exchange economy consisting
of two consumers: Agnieszka (A) and Bob (B), who consume two goods:
bananas (x1) and motor oil (x2). Good 2 is the numeraire, with
p2=1.
Q6 Agnieszka is endowed with ωA=(25,20). The equation for her
budget constraint is:
a. p1x1A+x2A=25+20p1
b. p1x1A+x2A=25p1
c. p1x1A+x2A=25p1+20
d. p1x1A+x2A=45.
e.
Q7. Bob’s utility function is uB(x1B,x2B)=x1B(x2B)2. This
implies that:
a. The market value of his gross demand for x1 is half that of...
11. Consider an exchange economy consisting of two people, A and B, endowed with two goods,...
11. Consider an exchange economy consisting of two people, A and
B, endowed with two goods, 1 and 2. Person A is initially endowed
with ωA= (0,3) and person B is initially endowed with
ωB= (6,0). They have identical preferences, which are
given by UA(x1, x2) =UB(x1, x2)
=x12x2.
(a) Write the equation of the contract curve (express
x2Aas a function of
x1A1).
(b) Let p2= 1. Find the competitive equilibrium
price,p1, and allocations,xA=
(x1A, x2A) and
xB= (x1B,
x2B)....
Q4. There are four consumers A, B, C and D who can potentially buy three goods—1,...
Q4. There are four consumers A, B, C and D who can potentially
buy three goods—1, 2, and 3. All three goods are made by a
monopolist who incurs a production cost of $40, $40 and $80,
respectively, for these goods. Consumers’ reservation prices for
these goods are as shown in the following table:
1 2 3
A 150 90 60
B 90 90 90
C 60 80 100
D 80 60 120
(a) [3] What are the optimal prices...
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