10. Perfect Price Discrimination with non-identical consumers. Assume two demanders-a low demander and a high demander. The respective demand functions are given as P₁ = 6 - Q₁ and P₂=8 - Q₂. MC is constant at 1. The "switch over" quantity, call it Q*, is for Q*+1 is $ $ is The price charged by the seller and the price charged for Q*- 1 is At the profit maximizing solution, the quantity sold to the high demander

10. Perfect Price Discrimination with non-identical consumers. Assume two demanders-a low demander and a high demander. The respective demand functions are given as P₁ = 6 - Q₁ and P₂=8 - Q₂. MC is constant at 1. The "switch over" quantity, call it Q, is for Q+1 is $ $ is The price charged by the seller and the price charged for Q*- 1 is At the profit maximizing solution, the quantity sold to the high demander

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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TRUE OR FALSE. A commodity “x” which has a price elasticity coefficient of - 1.5 is more price elastic than a commodity “z” which has a price elasticity coefficient of - 4.3.
You are working trying to estimate the proper price to charge a market for the firm that sells beer in Lancaster Pennsylvania. They estimated that the demand curve for the market is Quantity demanded=20-2P. The firm currently prices the good at 8 dollars. They want to move the price to 6 dollars in a attempt to increase profits. 1) What is the elasticity for this move in price (Use the midpoint method for elasticity) make sure you show your work? 2) Now you are contacted by a different branch of this company that is in a lower priced (Scranton P.A.) market with the same demand curve. They want to move the price from 2 to 5 dollars. What is the elasticity of this change (Use the midpoint method)? 3) Now suppose you find out that there is a similar product that impacts the Quantity demanded for a product. The relationship is Qd=15+Pb. Now suppose the price (Pb) of the other good is 5 and goes to 6. What is the Cross-price elasticity of the good?
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ABC Manufacturing has determined that the demand function for their heated socks is given by: 6 D(p) = 170 --p². a. Find E(p), the Elasticity of Demand as a function of price, p. E(p) = b. Find the Elasticity of Demand when heated socks are selling at a price of $5. Give result accurate to at least 3 decimal places. E(5) c. At this price ($5): We would say the demand for heated socks is: [Select an answer Based on this, in order to increase revenue we should: [Select an answer d. Use the Elasticity model to determine the price that maximizes revenue. (Round result to 2 decimal places.) P =
ABC Manufacturing has determined that the demand function for their glow-in-the-dark headbands is given 2 by: D(p) = 160-p². a. Find E(p), the Elasticity of Demand as a function of price, p. E(p) b. Find the Elasticity of Demand when glow-in-the-dark headbands are selling at a price of $9. Give result accurate to at least 3 decimal places. E(9) = = c. At this price ($9): We would say the demand for glow-in-the-dark headbands is: Select an answer Based on this, in order to increase revenue we should: [Select an answer P = d. Use the Elasticity model to determine the price that maximizes revenue. (Round result to 2 decimal places.)
Under the cross elasticity of demand between two complementary products___a) None of the above b) If the price of one product decreases, the demand for the other product will decrease. c) If the price of one product decreases, the demand for the other product will increase. d) If the price of one product increases, the demand for the other product will increase.
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For demand function P=24-6Q, demand Multiple Choice O is unit elastic at price 16. is unit elastic at price 12 is unit elastic at price 9. has unitary elasticity at all points on the function.
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Peaks & Valleys Co. serves customers in two towns, Abovely and Belowing. Residents of Abovely have demand function QA = 220 - 4PA. Residents of Belowing have demand function QB = 18 - 0.2PB. The total cost of serving Q = QA + QB consumers is C = 10Q. Who has more elastic demand at a given price, Abovely or Belowing residents, and whom would you expect to pay the higher price based on the elasticities if P&V price discriminates? Abovely residents have more elastic demand, and therefore will pay less. Abovely residents have more elastic demand, and therefore will pay more. Belowing residents have more elastic demand, and therefore will pay less. Belowing residents have more elastic demand, and therefore will pay more.
For each of the following situations, state whether total revenue received by the seller increases, decreases, or does not change. Type your answer in the blank space provided. Your answers should be increases, decreases, or does not change. a) If price elasticity of demand is -0.75 and price decreases, total revenue b) If price elasticity of demand is -1.5 and price decreases, total revenue c) If price elasticity of demand is -0.25 and price increases, total revenue d) If price elasticity of demand is -3.25 and price increases, total revenue e) If price elasticity of demand is -1.00 and price decreases, total revenue
4 In order to price-discriminate, a firm must be able to separate its customers who have different elasticities of demand. A firm can earn. more revenue by charging higher prices to consumers with relatively inelastic demand, and lower prices to consumers with relatively elastic demand. Consider the different customers listed below. Which ones have relatively inelastic demand, and which ones have relatively elastic demand? Items (4 items) (Drag and drop into the appropriate area below) Jordan goes to an out-of-state university. Categories The Jones family travels for a vacation. Robert goes to a matinee movie. Relatively elastic Drag and drop here Jerry buys multiple items (soda, popcorn, candy) from the concession stand at a movie theater. Relatively inelastic Drag and drop here