Assume a firm faces two customers in the market. Customer 1 has an inverse demand of p=120-91, and Customer 2 has an inverse demand of p=160-92 Marginal cost per unit is constant and equal to $60. Determine the profit-maximizing price and identical lump-sum fee charged to these two customers. For the following questions, assume the firm will always sell to both customers. The profit-maximizing price is $ (Enter a numeric response using a real number rounded to two decimal places.) The lump-sum fee is $ (Enter a numeric response rounded to the nearest penny.)

Assume a firm faces two customers in the market. Customer 1 has an inverse demand of p=120-91, and Customer 2 has an inverse demand of p=160-92 Marginal cost per unit is constant and equal to $60. Determine the profit-maximizing price and identical lump-sum fee charged to these two customers. For the following questions, assume the firm will always sell to both customers. The profit-maximizing price is $ (Enter a numeric response using a real number rounded to two decimal places.) The lump-sum fee is $ (Enter a numeric response rounded to the nearest penny.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Assume a firm faces two customers in the market. Customer 1 has an inverse demand of p= 120 - 91, and Customer 2 has an inverse demand of p= 180 – 92. Marginal cost per unit is constant and equal to $20. Determine the profit-maximizing price and identical lump-sum fee charged to these two customers. For the following questions, assume the firm will always sell to both customers. The profit-maximizing price is S (Enter a numeric response using a real number rounded to two decimal places.) The lump-sum fee is $ (Enter a numeric response rounded to the nearest penny.)
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You make delicious cupcakes that you mail to customers across the country. Your cupcakes are so unique and special that you have a great deal of pricing power. Your customers have identical demand curves for your cupcakes, and a representative customer’s demand curve is shown below. (It’s not needed, but the demand curve equation is P=5-0.2Q or Q=25-5P.) Suppose your MC=$1/cupcake, whether you produce lots or just a few cupcakes. To keep things simple, suppose there are no fixed costs, so FC=0.a) Acting as a monopolist, show the standard pricing analysis on the graph below that identifies your profit-mamximing price and quantity for your representative customer. Shade areas representing your profit and CS. (PS and profit are the same here since FC=0). b) (Suppose you offer a quantity discount: first 10 cupcakes at $3 each and any cupcakes over 10 are offered at a discounted price. What discount price will maximize your profit? Show this quantity discount arrangement on your graph…
A firm faces two groups of consumers with different demand equations as follows: Strong demander: Ps = 12 – Qs. %3D . Weak demander: Pw = 8- Qw- For simplicity, there is one strong demander and there is one weak demander. The marginal cost is $2 and there is no total fixed cost. The firm considers using two-part pricing strategy by assuming that the price per unit of a product (P) is greater than its marginal cost and both strong and weak demanders are in the market. What will the entry fee (A*) and the price of a product (P*) be? A* = $8; P* = $3. O A* = $8; P* = $4 O A* = $16; P* = $3. A* = $16; P* = $4. None of the above.
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You are an executive for Super Computer, Inc. (SC), which rents out super computers. SC receives a fixed rental payment per time period in exchange for the right to unlimited computing at a rate of P cents per second. SC has two types of potential customers of equal number—10 businesses and 10 academic institutions. Each business customer has the demand function: Q=14−P, where Q is in millions of seconds per month; each academic institution has the demand: Q=10−P. The marginal cost to SC of additional computing is 2 cents per second, regardless of volume. a. Suppose that you could separate business and academic customers. What rental fee and usage fee would you charge each group? What would be your profits? (Round all answers to the nearest integer) For business users, the rental fee would be$720,000per month and the usage fee is 2 cents per second. For academic institutions, the rental fee would be $320,000 per month and the usage fee is 2 cents per second.…
You are an executive for Super Computer, Inc. (SC), which rents out super computers. SC receives a fixed rental payment per time period in exchange for the right to unlimited computing at a rate of P cents per second. SC has two types of potential customers of equal number—10 businesses and 10 academic institutions. Each business customer has the demand function: Q=14−P, where Q is in millions of seconds per month; each academic institution has the demand: Q=10−P. The marginal cost to SC of additional computing is 2 cents per second, regardless of volume. a. Suppose that you could separate business and academic customers. What rental fee and usage fee would you charge each group? What would be your profits? (Round all answers to the nearest integer) For business users, the rental fee would be$720,000per month and the usage fee is 2 cents per second. For academic institutions, the rental fee would be $320,000 per month and the usage fee is 2 cents per second.…
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AT&T. It is early in the days of cellular (or mobile) telephony, and you are the price manager for AT&T's cell phone plan. It has been determined that there are two market segments: low-value consumers and high-value consumers. For simplicity, assume that all consumers within a segment are identical. A consumer in the low-value segment has monthly demand (measured in number of minutes) of Q, (p) = 80 - p, and a consumer in the high-value segment has monthly demand of QH (P) = 100 -p, where p is in cents per minute. a. Assume AT&T charges a flat price per minute with no membership fee. Derive the expression for consumer surplus for a low-value consumer and for a high-value consumer as a function of the price, p. Low-value consumer surplus, CS, (p): = High-value consumer surplus, CS, (p) = Show Transcribed Text Assume AT&T's marginal cost is a constant 10 cents per minute. You have decided to use a two-part tariff and must choose the monthly fixed fee f and the per-minute charge p. There…
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