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 DD 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)100120Do: PD 100 -0.5Q,Multiple ChoiceQuantityPanel A - One Daytime buyer's demandA* = $1,472A* = $2,178A* = $3,872SMC = AVCA* = $4,356200A* = $7,744100Assuming both daytime and nighttime markets are served, the optimal fixed access charge (4*) is0DN: PN 100 - QNSMC=AVC100QuantityPanel B - One Nighttime buyer's demand

The two part tariff is followed by the Monopoly firm to maximise the profit. The consumer has to pay…

D: P 100-0.50, SA SMC=AVC 200 0 Panel A- One Daytime buyer's demand Panel B - One Nighttime buyer's demand 100- Quantity Multiple Choice C O ssuming both daytime and nighttime markets are served, the optimal fixed access charge (4") is A' =$1,472 A'=$2,178 A* = $3,872 D: P = 100-Q, A* $4,356 SMC=AVC 100 Quantity

D: P 100-0.50, SA SMC=AVC 200 0 Panel A- One Daytime buyer's demand Panel B - One Nighttime buyer's demand 100- Quantity Multiple Choice C O ssuming both daytime and nighttime markets are served, the optimal fixed access charge (4") is A' =$1,472 A'=$2,178 A* = $3,872 D: P = 100-Q, A* $4,356 SMC=AVC 100 Quantity

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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