Answered: Suppose Ring Dental is the single…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose Ring Dental is the single supplier at HRM region provide the dental service and has a market demand curve Q = 40 – P; A total cost curve given by the formula:

T C = 80 - 20Q + 2Q²

Find the profit-maximizing quantity, price, and profit.

Now, suppose Halifax Dental wishes to separate the market and target to two different groups of customers young and old customers, the average cost = marginal cost = 10 for both markets

Young customers with elasticity = -5 and D_A = 12000 - 65P
Old customers with elasticity = -7 and D_B= 12000 - 55P

What is the profit if Halifax Dental sets the equal price for both markets? (use the average elasticity for equal price)
What is the profit if Halifax Dental charges different prices for each market?

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