magine that there are two types of consumers indexed by θi with i = H, L. Let the inverse demand curve for each be: P = θi(1 − qi) with θH > θL. Let the shares of the total population of N for each type be λ and 1 − λ, for groups θH and θL respectively. (a) Show that the aggregate demand is Q(P) =( N 1 − P ˜θ ) where ˜θ = λ/θH + 1−λ/θL , assuming that both groups are induced to buy. (b) Find the profit-maximizing menu-pricing strategy for a monopolist with constant marginal cost c. (c) Find the profit-maximizing uniform-pricing strategy for a monopolist with constant marginal cost c. (c) Find the profit-maximizing uniform-pricing strategy for a monopolist with constant marginal cost c.
magine that there are two types of consumers indexed by θi with i = H, L. Let the inverse demand curve for each be: P = θi(1 − qi) with θH > θL. Let the shares of the total population of N for each type be λ and 1 − λ, for groups θH and θL respectively. (a) Show that the aggregate demand is Q(P) =( N 1 − P ˜θ ) where ˜θ = λ/θH + 1−λ/θL , assuming that both groups are induced to buy. (b) Find the profit-maximizing menu-pricing strategy for a monopolist with constant marginal cost c. (c) Find the profit-maximizing uniform-pricing strategy for a monopolist with constant marginal cost c. (c) Find the profit-maximizing uniform-pricing strategy for a monopolist with constant marginal cost c.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Imagine that there are two types of consumers indexed by θi with i = H, L. Let the inverse demand curve for each be: P = θi(1 − qi) with θH > θL. Let the shares of the total population of N for each type be λ and 1 − λ, for groups θH and θL respectively.
(a) Show that the aggregate demand is Q(P) =( N 1 − P ˜θ ) where ˜θ = λ/θH + 1−λ/θL , assuming that both groups are induced to buy.
(b) Find the profit-maximizing menu-pricing strategy for a monopolist with constant marginal cost c. (c) Find the profit-maximizing uniform-pricing strategy for a monopolist with constant marginal cost c.
(c) Find the profit-maximizing uniform-pricing strategy for a monopolist with constant marginal cost c.
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 5 steps with 25 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
![Principles of Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781305585126/9781305585126_smallCoverImage.gif)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
![Managerial Economics: A Problem Solving Approach](https://www.bartleby.com/isbn_cover_images/9781337106665/9781337106665_smallCoverImage.gif)
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
![Managerial Economics & Business Strategy (Mcgraw-…](https://www.bartleby.com/isbn_cover_images/9781259290619/9781259290619_smallCoverImage.gif)
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education