Exercise A.9 You are an executive of Super Computer, INC. (SC), which rents supercomputers. SC receives a fixed rent for a period of time in exchange for the right to use unlimited computers equal to P cents per second. SC has two types of potential clients of equal numbers: 10 companies and 10 academic institutions. Each company has the demand function Q = 10 - P, where Q is expressed in millions of seconds per month; each academic institution has the demand Q = 8 - P. The marginal cost to SC of additional computer utilization is 2 cents per second, regardless of volume. a) Suppose you can distinguish companies from academic clients. What rental and usage fee would you charge each group? Calculate the profits you would get? b) Suppose that you cannot separate the two types of customers and that you did not charge a rental fee. What usage quota would maximize your profits? How many benefits

Joe has just moved to a small town with only one golf course, the Northlands Golf Club. His inverse demand function is p=200-2q, where q is the number of rounds of golf that he plays per year. The manager of the Northlands Club negotiates separately with each person who joins the club and can therefore charge individual prices. This manager has a good idea of what Joe's demand curve is and offers Joe a special deal, where Joe pays an annual membership fee and can play as many rounds as he wants at $20, which is the marginal cost his round imposes on the Club. What membership fee would maximize profit for the Club? The manager could have charged Joe a single price per round. How much extra profit does the Club earn by using two-part pricing? The profit-maximizing membership fee (F) is $. (Enter your response as a whole number.)

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 = 10 - P, where Q is in millions of seconds per month; each academic institution has the demand Q = 8-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? b. Suppose you were unable to keep the two types of customers separate and charged a zero rental fee. What usage fee would maximize your profits? What would be your profits? c. Suppose you set up one two-part tariff-that is, you set one rental and one usage fee that both business…

Joe has just moved to a small town with only one golf course, the Northlands Golf Club. His inverse demand function is p = 140-2q, where q is the number of rounds of golf that he plays per year. The manager of the Northlands Club negotiates separately with each person who joins the club and can therefore charge individual prices. This manager has a good idea of what Joe's demand curve is and offers Joe a special deal, where Joe pays an annual membership fee and can play as many rounds as he wants at $40, which is the marginal cost his round imposes on the Club. Joe marries Susan, who is also an enthusiastic golfer. Susan wants to join the Northlands Club. The manager believes that Susan's inverse demand curve is p = 120-2q. The manager has a policy of offering each member of a married couple the same two-part prices, so he offers them both a new deal. What two-part pricing deal maximizes the club's profit? Will this new pricing have a higher or lower access fee than in Joe's original…