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Suppose that firm Alphabet is the only company that sells all-inclusive vacation packages in the UK. It faces two markets with demand curves given by P₁ = 200- Q₁ and P₂ = 100-Q2. Assume that Alphabet's total cost function is C = 400 + 200 1) What is the market structure of the all-inclusive vacation packages in the UK? Is firm Alphabet a price taker or price maker? Explain. 2) If Alphabet can price discriminate and could tell which consumer belongs to which market before the purchase happens, what is the type of price discrimination that Alphabet is practising? Explain. Give another example of the same type of price discrimination. 3) If Alphabet can charge different prices at those two markets, what price should it charge in each market in order to maximise profits? What are the quantities it should produce in each market? 4) What if he cannot price discriminate? Then what price should he charge? What is the quantity produced?

Suppose that firm Alphabet is the only company that sells all-inclusive vacation packages in the UK. It faces two markets with demand curves given by P₁ = 200- Q₁ and P₂ = 100-Q2. Assume that Alphabet's total cost function is C = 400 + 200 1) What is the market structure of the all-inclusive vacation packages in the UK? Is firm Alphabet a price taker or price maker? Explain. 2) If Alphabet can price discriminate and could tell which consumer belongs to which market before the purchase happens, what is the type of price discrimination that Alphabet is practising? Explain. Give another example of the same type of price discrimination. 3) If Alphabet can charge different prices at those two markets, what price should it charge in each market in order to maximise profits? What are the quantities it should produce in each market? 4) What if he cannot price discriminate? Then what price should he charge? What is the quantity produced?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Part C D
Suppose that firm Alphabet is the only company that sells all-inclusive vacation packages in the UK. It faces two markets with demand curves given by P₁ = 200 - Q₁ and P₂ = 100-Q2. Assume that Alphabet's total cost function is C = 400 + 200 1) What is the market structure of the all-inclusive vacation packages in the UK? Is firm Alphabet a price taker or price maker? Explain. 2) If Alphabet can price discriminate and could tell which consumer belongs to which market before the purchase happens, what is the type of price discrimination that Alphabet is practising? Explain. Give another example of the same type of price discrimination. 3) If Alphabet can charge different prices at those two markets, what price should it charge in each market in order to maximise profits? What are the quantities it should produce in each market? 4) What if he cannot price discriminate? Then what price should he charge? What is the quantity produced?
Transcribed Image Text:Suppose that firm Alphabet is the only company that sells all-inclusive vacation packages in the UK. It faces two markets with demand curves given by P₁ = 200 - Q₁ and P₂ = 100-Q2. Assume that Alphabet's total cost function is C = 400 + 200 1) What is the market structure of the all-inclusive vacation packages in the UK? Is firm Alphabet a price taker or price maker? Explain. 2) If Alphabet can price discriminate and could tell which consumer belongs to which market before the purchase happens, what is the type of price discrimination that Alphabet is practising? Explain. Give another example of the same type of price discrimination. 3) If Alphabet can charge different prices at those two markets, what price should it charge in each market in order to maximise profits? What are the quantities it should produce in each market? 4) What if he cannot price discriminate? Then what price should he charge? What is the quantity produced?
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