Dunder Mifflin sells specialty paper to commercial clients in the Scranton area. Some of Dunder Mifflin's clients are seen as 'intensive users' who are price-sensitive, and have demands given by: P = 8 – 0.1Q where Q is the number of reams of paper desired per week. Other clients are less-intensive users of paper and have inverse demands given by: P = 10 – 0.2Q. If Dunder Mifflin's marginal cost of paper is zero, and it attempts to separate more-intensive and less-intensive buyers, what price should Dunder Mifflin set for each group? How much profit do they earn under this system?

Dunder Mifflin sells specialty paper to commercial clients in the Scranton area. Some of Dunder Mifflin's clients are seen as 'intensive users' who are price-sensitive, and have demands given by: P = 8 – 0.1Q where Q is the number of reams of paper desired per week. Other clients are less-intensive users of paper and have inverse demands given by: P = 10 – 0.2Q. If Dunder Mifflin's marginal cost of paper is zero, and it attempts to separate more-intensive and less-intensive buyers, what price should Dunder Mifflin set for each group? How much profit do they earn under this system?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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