Suppose that you are a manager for Adobe Systems, the creator of Photoshop and other software products. Adobe rents most of its products to its customers. Suppose that it has two classes of customers for its Photoshop program: students and businesspeople. Say that the demand function for students is: And, the demand function for businesspeople is: Q 500,000 programs-1,000P QB-800,000 programs - 1,000P In both demand functions, P is the annual rental price of the program. Because Photoshop is delivered over the Internet, the marginal cost of another program is $0. Suppose that Adobe has fixed costs of $5,000,000. Suppose price discrimination is possible. The rental price that you would recommend Adobe to charge students would be 5. and the quantity of products that it should rent would be programs. The rental price that you would recommend Adobe to charge businesspeople would be $☐ and the quantity of products that it should rent would be programs. Adobe's economic profit or economic loss would be $

Suppose that you are a manager for Adobe Systems, the creator of Photoshop and other software products. Adobe rents most of its products to its customers. Suppose that it has two classes of customers for its Photoshop program: students and businesspeople. Say that the demand function for students is: And, the demand function for businesspeople is: Q 500,000 programs-1,000P QB-800,000 programs - 1,000P In both demand functions, P is the annual rental price of the program. Because Photoshop is delivered over the Internet, the marginal cost of another program is $0. Suppose that Adobe has fixed costs of $5,000,000. Suppose price discrimination is possible. The rental price that you would recommend Adobe to charge students would be 5. and the quantity of products that it should rent would be programs. The rental price that you would recommend Adobe to charge businesspeople would be $☐ and the quantity of products that it should rent would be programs. Adobe's economic profit or economic loss would be $

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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