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A firm sells its product to two groups of buyers: daytime buyers and nighttime buyers. There are 50 daytime buyers, all of whom have identical demands given by Dp in the figure. There are 50 nighttime buyers, all of whom have identical demands given by DN in the figure. The firm's variable costs are constant (SMC=AVC= $12) and its total fixed cost is $250,000. The marketing director must devise a two-part pricing plan that will maximize the firm's profit. Price and cost ($ per unit) 100 12 0 Do: PD 100 - 0.5Q SMC = AVC 200 Quantity Panel A - One Daytime buyer's demand Price and cost ($ per unit) 100 12 DN: PN = 100 - QN Quantity SMC=AVC 100 Panel B - One Nighttime buyer's demand How much profit will the firm earn by charging the optimal access charge and optimal access fee (remember that there are 50 daytime and 50 nighttime buyers)?

A firm sells its product to two groups of buyers: daytime buyers and nighttime buyers. There are 50 daytime buyers, all of whom have identical demands given by Dp in the figure. There are 50 nighttime buyers, all of whom have identical demands given by DN in the figure. The firm's variable costs are constant (SMC=AVC= $12) and its total fixed cost is $250,000. The marketing director must devise a two-part pricing plan that will maximize the firm's profit. Price and cost ($ per unit) 100 12 0 Do: PD 100 - 0.5Q SMC = AVC 200 Quantity Panel A - One Daytime buyer's demand Price and cost ($ per unit) 100 12 DN: PN = 100 - QN Quantity SMC=AVC 100 Panel B - One Nighttime buyer's demand How much profit will the firm earn by charging the optimal access charge and optimal access fee (remember that there are 50 daytime and 50 nighttime buyers)?

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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A. Yes, because only $77,200 of profit is earned by serving only the daytime buyers.

 

B. Yes, because only $137,200 of profit is earned by serving only the daytime buyers.

 

C. No, because $240,000 of profit is earned by serving only the daytime buyers.

 

D. No, because $300,000 of profit is earned by serving only the daytime buyers.

A firm sells its product to two groups of buyers: daytime buyers and nighttime buyers. There are 50 daytime buyers, all of whom have identical demands given by Dp in the figure. There are 50 nighttime buyers, all of whom have identical demands given by DN in the figure. The firm's variable costs are constant (SMC=AVC= $12) and its total fixed cost is $250,000. The marketing director must devise a two-part pricing plan that will maximize the firm's profit. Price and cost ($ per unit) 100 12 0 DD: PD 100 - 0.5Q SMC = AVC 200 Quantity Panel A - One Daytime buyer's demand Price and cost ($ per unit) 100 2 0 DN: PN 100 - QN Quantity SMC = AVC 100 Panel B - One Nighttime buyer's demand How much profit will the firm earn by charging the optimal access charge and optimal access fee (remember that there are 50 daytime and 50 nighttime buyers)?
Transcribed Image Text:A firm sells its product to two groups of buyers: daytime buyers and nighttime buyers. There are 50 daytime buyers, all of whom have identical demands given by Dp in the figure. There are 50 nighttime buyers, all of whom have identical demands given by DN in the figure. The firm's variable costs are constant (SMC=AVC= $12) and its total fixed cost is $250,000. The marketing director must devise a two-part pricing plan that will maximize the firm's profit. Price and cost ($ per unit) 100 12 0 DD: PD 100 - 0.5Q SMC = AVC 200 Quantity Panel A - One Daytime buyer's demand Price and cost ($ per unit) 100 2 0 DN: PN 100 - QN Quantity SMC = AVC 100 Panel B - One Nighttime buyer's demand How much profit will the firm earn by charging the optimal access charge and optimal access fee (remember that there are 50 daytime and 50 nighttime buyers)?
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