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3. The inverse demand a monopoly faces is p = 100 - Q+ VA, where A is the level of advertising. The monopoly incurs a constant marginal and average cost of production of $10 and a constant marginal and average cost of advertising of $1.

3. The inverse demand a monopoly faces is p = 100 - Q+ VA, where A is the level of advertising. The monopoly incurs a constant marginal and average cost of production of $10 and a constant marginal and average cost of advertising of $1.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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(111) Will bê the movie theater's profit from group price discrimination The individual demand for rides at an amusement park in Ellentown, Donkey Pa represented by the demand function q = 8 - p, where q is the number of rides and the price. Donkey Park incurs a constant marginal and average cost of $2 per ride. (a) Suppose Donkey Park employs block pricing with two blocks. Find the pro maximizing blocks and the corresponding block prices. (b) Suppose Donkey Park employs two-part pricing. Find the profit-maximizing er trance fee and charge per ride. (c) Without calculating the deadweight loss, argue which pricing method, the one in (a) or the one in (b), results in a lower deadweight loss. 3. The inverse demand a monopoly faces is p = 100 - Q+ VA, where A is the level of advertising. The monopoly incurs a constant marginal and average cost of production of $10 and a constant marginal and average cost of advertising of $1. (a) Write down the monopoly's profit function. (b) Solve for the monopoly's profit-maximizing price, quantity, and level of advertising. F12 C F5 F10 F11 F7 F8 F9 F6 F3
Transcribed Image Text:(111) Will bê the movie theater's profit from group price discrimination The individual demand for rides at an amusement park in Ellentown, Donkey Pa represented by the demand function q = 8 - p, where q is the number of rides and the price. Donkey Park incurs a constant marginal and average cost of $2 per ride. (a) Suppose Donkey Park employs block pricing with two blocks. Find the pro maximizing blocks and the corresponding block prices. (b) Suppose Donkey Park employs two-part pricing. Find the profit-maximizing er trance fee and charge per ride. (c) Without calculating the deadweight loss, argue which pricing method, the one in (a) or the one in (b), results in a lower deadweight loss. 3. The inverse demand a monopoly faces is p = 100 - Q+ VA, where A is the level of advertising. The monopoly incurs a constant marginal and average cost of production of $10 and a constant marginal and average cost of advertising of $1. (a) Write down the monopoly's profit function. (b) Solve for the monopoly's profit-maximizing price, quantity, and level of advertising. F12 C F5 F10 F11 F7 F8 F9 F6 F3
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