a demand given by Qs = 4000 - 100P. The marginal cost of one more alteration is constant and al to zero. (a) (b) What is the value of each demand's elasticity at the optimal price level? (c) What is the total consumer surplus (for both groups)? (d) Suppose that a regulation prohibits price discrimination. What is the optimal (uniform) price when the markets are combined? How much does the regulation cost the tailor in terms of forgone profits? (e) What happens to consumer surplus? Suppose that the tailor can charge different prices to each type of customer. What are the optimal prices? What is the total profit?
a demand given by Qs = 4000 - 100P. The marginal cost of one more alteration is constant and al to zero. (a) (b) What is the value of each demand's elasticity at the optimal price level? (c) What is the total consumer surplus (for both groups)? (d) Suppose that a regulation prohibits price discrimination. What is the optimal (uniform) price when the markets are combined? How much does the regulation cost the tailor in terms of forgone profits? (e) What happens to consumer surplus? Suppose that the tailor can charge different prices to each type of customer. What are the optimal prices? What is the total profit?
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter6: Simple Pricing
Section: Chapter Questions
Problem 6.1IP
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