Larry holds a monopoly in the market for pies, with no fixed costs and a constant marginal cost of c = 24. Moe, Curly, and Shemp are the three consumers who have the individual demand curves q1(p) = 30 - p/ 2, q2(p) = 20 - p/ 3, q3(p) = 10 - p/ 6 a) Now suppose that Larry is a third-degree price discriminator who charges different prices to each consumer by segmenting the market. Suppose that Moe, Curly, and Shemp prefer to eat apple, cherry, and pumpkin pies respectively, and that Larry can make each of these for the same cost c = 24. For each type of pie, find the price pIiII he charges and the quantity qIiII he sells. b) Find the surplus to consumers CSIII and producers PSIII under market segmentation as well as the deadweight loss DWLIII . How much surplus CSIiII goes to each consumer? c) Which of these equilibria are efficient? Which is best for the consumers, and which is best for the producer?
Larry holds a
Moe, Curly, and Shemp are the three consumers who have the individual demand curves
q1(p) = 30 - p/ 2, q2(p) = 20 - p/ 3, q3(p) = 10 - p/ 6
a) Now suppose that Larry is a third-degree
and the quantity qIiII he sells.
b) Find the surplus to consumers CSIII and producers PSIII under market segmentation as well as the
c) Which of these equilibria are efficient? Which is best for the consumers, and which is best for the producer?
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