Problem 11-05 (algo) You are the manager of a monopoly. Your analytics department estimates that a typical consumer's inverse demand function for your firm's product is P=150-40Q, and your cost function is q) = 70Q a. Determine the optimal two-part pricing strategy. Per-unit fee: $ Fixed fee: $ b. How much additional profit do you earn using a two-part pricing strategy compared with charging this consumer a per-unit price? $

Problem 11-05 (algo) You are the manager of a monopoly. Your analytics department estimates that a typical consumer's inverse demand function for your firm's product is P=150-40Q, and your cost function is q) = 70Q a. Determine the optimal two-part pricing strategy. Per-unit fee: $ Fixed fee: $ b. How much additional profit do you earn using a two-part pricing strategy compared with charging this consumer a per-unit price? $

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter14: Indirect Price Discrimination

Section: Chapter Questions

Problem 14.2IP

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You are the manager of a monopoly. Your analytics department estimates that a typical consumer's Inverse demand function for you firm's product is P= 100 -400, and your cost function is a = 200. a. Determine the optimal two-part pricing strategy. Per-unit fee: $ 20 Fixed fee: $ b. How much additional profit do you earn using a two-part pricing strategy compared with charging this consumer a per-unit price?
Question 5: Jimmy has a room that overlooks, from some distance, a major league baseball stadium. He decides to rent a telescope for $50 a week and charge his friends and classmates to use it to peep at the game for 30 seconds. He can act as a monopolist for renting out "peeps". For each person who takes a 30 second peep, it costs Jimmy $.20 to clean the eyepiece. Jimmy believes he has the following demand for his service: Price of a Peep $1.20 Quantity of peeps demanded 1.00 90 100 150 200 250 300 70 60 50 350 40 30 400 450 20 10 500 550 a) For each price, calculate the total revenue from selling peeps and themarginal revenue per peep. Price Quantity TR MR $1.20 100 90 100 150 200 70 250 60 300 350 50 40 30 400 450 20 500 10 550 b) At what quantity will Jimmy's profit be maximized? What price will he charge? What will his total profit be? c) Jimmy's landlady complains about all the visitors coming into the building and tells Jimmy to stop selling peeps. Jimmy discovers, though, if he…
You are the manager of a monopoly. Your analytics department estimates that a typical consumer's inverse demand function for your firm's product is P = 300-20 Q, and your cost function is C(Q) = 60Q. a. Determine the optimal two - part pricing strategy. Per - unit fee: $ Fixed fee: $b. How much additional profit do you earn using a two - part pricing strategy compared with charging this consumer a per- unit price?
You are the manager of a monopoly. Your analytics department estimates that a typical consumer’s inverse demand function for your firm’s product is P = 200 − 20Q, and your cost function is C(Q) = 80Q.a. Determine the optimal two-part pricing strategy. Per-unit fee: $ Fixed fee: $ b. How much additional profit do you earn using a two-part pricing strategy compared with charging this consumer a per-unit price?
You are the manager of a monopoly. Your analytics department estimates that a typical consumer's inverse demand function for your firm's product is P= 400 -20Q, and your cost function is CQ) = 120Q a. Determine the optimal two-part pricing strategy. Per-unit fee: $ 120 Fixed fee: $ b. How much additional profit do you earn using a two-part pricing strategy compared with charging this consumer a per-unit price?
Website Profit The latest demand equation for your gaming website, www.mudbeast.net, is given by q=-100x + 1500 where q is the number of users who log on per month and x is the log-on fee you charge. Your Internet provider bills you as follows. Site maintenance fee: $50 per month High-volume access fee: $0.50 per log-on Find the monthly cost as a function of the log-on fee x. C(x): = X Find the monthly profit as a function of x. P(x) = Determine the log-on fee you should charge (in dollars) to obtain the largest possible monthly profit. x = $ per log-on What is the largest possible monthly profit (in dollars)? $
You are the manager of a monopoly. Your analytics department estimates that a typical consumer's inverse demand function for your firm's product is P= 450-40Q, and your cost function is QQ-2900. a. Determine the optimal two-part pricing strategy. Per-unit fee: $[ Fixed fee: $1 b. How much additional profit do you earn using a two-part pricing strategy compared with charging this consumer a per-unit price? $ Ņ
You are the manager of a monopoly. Your analytics department estimates that a typical consumer's inverse demand function for your firm's product is P = 350-20Q and your cost function is C(Q) = 70Q. a. Determine the optimal two-part pricing strategy (optimal meaning most profitable) Per Unit Fee:$___ (do not round intermediate numbers, include two decimals) Fixed Fee $____ (do not round intermediate numbers, include two decimals) b. How much additional profit do you earn using a two-part pricing strategy compared with charging this consumer a per-unit price? PLEASE SHOW ALL WORK AND CALCULATIONS
You are a consultant who is advising a monopoly on the optimal pricing strategy. Your analysis has yielded the following information. • The marginal cost (MC) is $3. • The demand equation is P = 90 - 3Q . The total cost (TC) is given by 35+ 3Q The marginal revenue (MR) is given by 90 - 6Q Based on this information, answer the following questions. Show FULL calculations! (a) Following the concepts of profit maximization, what is the profit maximizing quantity for this monopoly? (b) Following the concepts of profit maximization, what is the profit maximizing price for this monopoly? (c) Following the concepts of profit maximization, what is the monopoly's profit at the profit maximization point?
The price elasticity of demand for a monopolistic firm's product is given by 0.3 p 8-0.6 p najp == (a) If the firm raises their price from po = $64.00 to p₁= $65.00, then the demand for their good will... [Select] (b) The firm's marginal revenue is maximized when they set their price to... [Select]
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