5. Exercise 4.5Roger is a regular consumer of personalized greeting cards with Hofmann photographs. Itsdemand curve is given by q = 31 -0.5P. Rogelio is a representative consumer of this typeof cards so we can assume that the rest of the customers, 1,000 in total, have the samedemand curve. The supplier company, Hofmann, can produce each card at a constantaverage and marginal cost of €2. In the market of personalized greeting cards there aremany other companies that offer very similar cards.Consider the following 4 scenarios:(i) Hofmann acts as a perfect competitor.ii) Hofmann acts as a monopolist.iii) Hofmann acts as a first-degree discriminator monopolistiv) Hofmann acts as a second-degree discriminator monopolist and offers each of itscustomers the possibility to buy the first 15 cards at a unit price of € 32, the next 5 (from €16 to 20) at a unit price of € 22 and the following 10 (from € 21 to 30) at a unit price of €2.Calculate, for the 4 scenarios proposed, the surplus of the consumer, the surplus theproducer, represent graphically and indicate:a) Which scenario is the most favourable for consumers?b) Which scenario is the most favourable for Hofmann?c) Which scenario is the most favourable for consumers and Hofmann taken together?

“Since you have posted multiple questions with multiple sub-parts, we will provide the solution only…

Roger is a regular consumer of personalized greeting cards with Hofmann photographs. Its demand curve is given by qd = 31-0.5P. Rogelio is a representative consumer of this type of cards so we can assume that the rest of the customers, 1,000 in total, have the same demand curve. The supplier company, Hofmann, can produce each card at a constant average and marginal cost of €2. In the market of personalized greeting cards there are many other companies that offer very similar cards.

Roger is a regular consumer of personalized greeting cards with Hofmann photographs. Its demand curve is given by qd = 31-0.5P. Rogelio is a representative consumer of this type of cards so we can assume that the rest of the customers, 1,000 in total, have the same demand curve. The supplier company, Hofmann, can produce each card at a constant average and marginal cost of €2. In the market of personalized greeting cards there are many other companies that offer very similar cards.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

A downtown bar serves a drink that UCSB students love. The profit-maximizing owner knows that any given student has a demand for drink given by p = 14 -q and a non-student has demand p 6 – q. Because the bar can't identify whether a customer is a student, she decides to sell drinks in packages. She offers a large package of 12 drinks and a small package of 4 drinks, and each student is only allowed to buy one package. Resales are strictly prohibited. The bar's marginal cost is 2. If both packages are offered and priced optimally, what is the minimum surplus students must get from the large package in order to not want to buy the small package? a. 64 32 O C. 26 O d. 80 b.
A firm with market power has an individual consumer demand of Q 10 P and total costs of C = 2Q. What is the optimal amount of this product to package in a single block? Multiple Choice 2 8 64 =
Cathy sells hand sanitizers in a small town. Daily sanitizer demand equal Q(P)=300-25P Where Q is the market output and p is market price Cost of bottling and distributing is C(q)=4q Suppose cathy is the only seller of sanitizer, what price should cathy charge? What profit does she earn? Suppose dom also produces hand sanitizer in town, and cathy and domm both simultaneously choose price of hand sanitizer, consumers have perfect information. Derive the reaction functions for cathy and domm What is the Nash equilibrium for this market?
Presently, Alpha Chemical and Beta Cleaners are the only suppliers of services that clean and refurbish large holding tanks at manufacturing plants in the Northeast. No other suppliers have the equipment necessary to perform these treatments. The market inverse demand for these cleaning services is given below. P=800-80 where P is price per treatment and Q is total number of treatments per week. For simplicity, also assume that neither firm has fixed costs. From company records, you are given the following variable cost function for each firm: TVC₁ = 30 TVCg =5Q In the work that follows, you may round all your results to 2 decimal places to reduce the clutter in your answers. a. Suppose Elon Must is contemplating buying both companies and since Alpha has lower operating costs, his first thought is to shut down Beta and supply the entire market as a single plant monopoly. If he does this, what price will he charge per treatment and how many treatments will he sell each week? What…
EasyTax markets both a deluxe and a standard version of its software. The deluxe version contains additional features that are likely to appeal to sophisticated users. The marginal costs of producing and distributing the two versions are virtually equal, and equal to zero. The market is equally divided into two types of users, sophisticated and unsophisticated (and assume one user of each type). The maximum willingness to pay for both types of users for the standard and deluxe versions are given in the following table: Standard Deluxe Unsophisticated 20 20 Sophisticated 35 100 (a) Assuming that the company producing EasyTax can distinguish between sophisticated and unsophisticated users (because, for instance, the sophisticated users are registered accountants), what are the optimal prices to be charged to each category of users? What is the company’s profit? (b) Assume now that the company cannot distinguish between the two types of user.…
Jims diner is just about to open in memphis, tennessee. however, jim is trying to decide whether he wants to offer coke or pepsi soda products. he determines that, to offer either product, he will have to spend $1500 in sunk costs to purchase and install the appropriate paraphernalia. Ultimately, he chooses to offer coke products and agrees to pay coke 5 cents per ounce of coke sold for the right to use its product. After jim makes the investments specific to his soda choice, coke returns and asks for a fixed (One-time) fee in addition to 5 cents per ounce. What is the most jim should be willing to pay? explain
Bill is considering opening a new bookstore near the university campus. There are two possible sites under consideration. One is relatively small, while the other is large. If he opens at small site and demand is good, he will generate a profit of $60,000. If demand is low, he will lose $20,000. If he opens at large site and demand is high he will generate a profit of $90,000, but he will lose $40,000 if demand is low. He also has decided that he will open at one of these sites. He believes that there is a 60 percent chance that demand will be high. He assigns the following utilities to the different profits: U(60,000) = ? U(-20,000) = 0.20 U(90,000) = 1 U(-40,000) = 0 For what value of utility for $60,000, will Bill be indifferent between the two alternatives? (Show all your work)
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) 100 12 0 Do: PD 100 -0.5Q, Multiple Choice Quantity Panel A - One Daytime buyer's demand A* = $1,472 A* = $2,178 A* = $3,872 SMC = AVC A* = $4,356 200 A* = $7,744 100 Assuming both daytime and nighttime markets are served, the optimal fixed access charge (4*) is 0 DN: PN 100 - QN SMC=AVC 100 Quantity Panel B - One Nighttime buyer's demand
HEAD and Dunlop set prices simultaneously for their respective tennis rackets. Let p₁ ≥ 0 denote the price set by HEAD and p2 ≥ 0 the price set by Dunlop. Consumers demand 4-2p1+p2 billions of HEAD rackets and 4-2p2+p₁ billions of Dunlops's. Assume that the cost of producing a tennis rackets is 0, so the payoff of HEAD is v₁ (P₁, P2) = P1(4-2p₁+P2), and the payoff of Dunlop is v2 (P1, P2) = P2(4-2p2 +P₁). (a) What is the best-response p₁ = BR₁(p2) of HEAD to a price p2 chosen by What is the best-response p2 = . BR₂ (p1) of Dunlop to a price p₁ chosen by Dunlop? HEAD? Find the Nash equilibrium of this game. Which strategies are rationalizable (i.e., survive the process of iterated of strategies that are not best responses for any surviving play of the eliminatio opponent,. (d) Suppose both firms choose prices p = P2 = 2. Does this outcome Pareto dominate the Nash equilibrium? (b) (c)
Suppose you have one type of customer who comes to see your team play and that customer has a demand curve of P = $40 - Q. Also assume the marginal cost of having a person come to see your game is a constant $2. If you were to charge a two-part pricing scheme whereby you charged a PSL and then a price-per-ticket, which strategy would lead to the highest possible profit per customer? PSL = $722; P = $2 %3D PSL = $361; P = $21 %3D PSL = $1,444; P = $21 %3D PSL = $361; P = $2 %3D
If exactly 206 people sign up for a charter flight, Leisure World Travel Agency charges $304/person, However, if more than 206 people sign up for the flight (assume this is the case), then each fare is reduced by $1 for each additional person. Let x denote the number of passengers above 206. Find the revenue function R(x). R(x) = Determine how many passengers will result in a maximum revenue for the travel agency. passengers What is the maximum revenue? $ What would be the fare per passenger in this case? dollars per passenger