Question

In: Economics

Suppose a business firm faces the following demand equation: Q = 40 – 0.5P. Marginal cost...

Suppose a business firm faces the following demand equation: Q = 40 – 0.5P. Marginal cost is MC = $20.

b. What type of businesses should consider implementing the two-part pricing strategy? Briefly explain your answer

a. Suppose the firm applies the two-part pricing strategy. Compute the fixed fee, variable (per unit) fee, output, revenue and cost associated with this pricing

Solutions

Expert Solution

Rahul Sunny answered 1 year ago
Next > < Previous

Related Solutions

Suppose a business firm faces the following demand equation: Q = 40 – 0.5P. Marginal cost...
Suppose a business firm faces the following demand equation: Q = 40 – 0.5P. Marginal cost is MC = $20. a. Suppose the firm applies the two-part pricing strategy. Compute the fixed fee, variable (per unit) fee, output, revenue and cost associated with this pricing. b. What type of businesses should consider implementing the two-part pricing strategy? Please explain.
Suppose a business firm faces the following demand equation: Q = 40 – 0.5P. Marginal cost...
Suppose a business firm faces the following demand equation: Q = 40 – 0.5P. Marginal cost is MC = $20. Now suppose the firm decides to offer quantity discount by selling the product in bundles of 10 units. a. What is the maximum price that the firm can charge for the first 10 units, for the second 10 units, and for the third 10 units? Now compute the revenue and cost of selling the three bundles (a total 30 units)...
Suppose a monopolist faces a market demand curve Q = 50 - p. If marginal cost...
Suppose a monopolist faces a market demand curve Q = 50 - p. If marginal cost is constant and equal to zero, what is the magnitude of the welfare loss? If marginal cost increases to MC = 10, does welfare loss increase or decrease? Use a graph to explain your answer
Suppose a monopolist faces a market demand curve Q= 120 - 2p. a. If marginal cost...
Suppose a monopolist faces a market demand curve Q= 120 - 2p. a. If marginal cost is constant and equal to zero, what is the magnitude of the welfare loss? b. If marginal cost increases to MC= 10, does welfare loss increase or decrease? Use a graph to explain your answer.
Assume a firm faces the following demand and cost functions: Demand is: Q = 2600 –...
Assume a firm faces the following demand and cost functions: Demand is: Q = 2600 – 100P + 0.2M – 500Pr ; AVC = 20 – 0.07Q + 0.0001Q^2; M = $20,000; Pr = $2; Should the firm shut down in the short-run? What are the expected profits if fixed costs are $22,500?
A monopolist with marginal cost of MC=Q faces a demand curve of QD = 20 -...
A monopolist with marginal cost of MC=Q faces a demand curve of QD = 20 - 2P. This implies that P = 10 - (1/2)Q and that the marginal revenue is MR = 10 - Q. a. Sketch demand, marginal revenue, and marginal cost curves. b. What quantity and price will the monopolist set? c. What quantity and price would the monopolist set if it produced at the efficient market outcome where P=MC? d. Identify the CS, PS and DWL...
3. A yoga classroom faces two demand curves. The demand by local residents is Q=100-0.5P, and...
3. A yoga classroom faces two demand curves. The demand by local residents is Q=100-0.5P, and the demand by nonlocal residents is Q=200-0.5P. The marginal cost of serving either local or nonlocal residents is constant at $100. If the yoga classroom practices third-degree price discrimination, it will charge local and nonlocal residents a price of _____ and _____, respectively. a. $150; $250 b. $100; $200 c. $250; $350 d. $200; $300. How many people will they serve if they charge...
Consider a monopoly firm that faces the following demand curve, total cost curve, and marginal cost: P(Q) = 120 – 4Q; TC(Q) = 400 + 4Q; MC = 4
Consider a monopoly firm that faces the following demand curve, total cost curve, and marginal cost: P(Q) = 120 – 4Q; TC(Q) = 400 + 4Q; MC = 4a. What is the marginal revenue (MR) equation?b. Determine the profit maximizing level of production for this monopolist.c. What is the price that the monopolist will charge at the profit maximizing level of production?d. What is the monopolists’ profit at the profit maximizing level of output?e. Suppose the government regulates the industry...
A monopolist with constant average and marginal cost equal to 8 faces demand Q = 100...
A monopolist with constant average and marginal cost equal to 8 faces demand Q = 100 - P, implying that its marginal revenue is MR = 100 - 2Q. (Wrong question Its profit maximizing quantity is ... should be deadwieght loss) the deadweight loss is Select one: a. 1058 b. 966 c. none of the answers. d. 3680
Suppose that a monopoly faces the demand, marginal revenue, and cost schedules below. Quantity Price Marginal...
Suppose that a monopoly faces the demand, marginal revenue, and cost schedules below. Quantity Price Marginal Revenue Marginal Cost Average Total Cost 1 230 230 100 150 2 210 190 100 125 3 190 150 100 116.6666667 4 170 110 100 112.5 5 150 70 100 110 6 130 30 100 108.3333333 7 110 -10 100 107.1428571 8 90 -50 100 106.25 9 70 -90 100 105.5555556 10 50 -130 100 105 What quantity maximizes profit? The monopoly Q =...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT