Suppose that individual demand for a product is given byQd = 1000 – 5P. Marginal revenue, MR = 200 – 0.4Q, andmarginal cost is constant at $20. There are no fixed costs.a. The firm is considering a quantity discount. The first 400 unitscan be purchased at a price of $120, and further units can bepurchased at a price of $80. How many units with theconsumer buy in total?b. Show that this second-degree price-discrimination scheme ismore profitable than a single monopoly price.
Suppose that individual demand for a product is given byQd = 1000 – 5P. Marginal revenue, MR = 200 – 0.4Q, andmarginal cost is constant at $20. There are no fixed costs.a. The firm is considering a quantity discount. The first 400 unitscan be purchased at a price of $120, and further units can bepurchased at a price of $80. How many units with theconsumer buy in total?b. Show that this second-degree price-discrimination scheme ismore profitable than a single monopoly price.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Suppose that individual demand for a product is given by
Qd = 1000 – 5P. Marginal revenue, MR = 200 – 0.4Q, and
marginal cost is constant at $20. There are no fixed costs.
a. The firm is considering a quantity discount. The first 400 units
can be purchased at a
purchased at a price of $80. How many units with the
consumer buy in total?
b. Show that this second-degree price-discrimination scheme is
more profitable than a single
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