There are two types of consumers in Melbourne: students and non-students. The student population is 10, and each student’s demand of printing paper is Q=1−p, for p<1. The non-student population is 40, and each non-student’s demand of printing paper is Q=3−p, for p<3. Suppose OfficeMax is the only seller of printing paper in Melbourne. Assume zero production cost. OfficeMax introduces printing paper in smaller packages targeting the students. The non-students are willing to pay 5 for a smaller package and 7 for a standard package, and the students are willing to pay 3 for a smaller package and 4 for a standard package. If a consumer does not purchase, her utility is zero. Find all the prices, Pn for a smaller package and Ps for a standard package, so that the students choose the smaller packages and the non-students choose the standard ones
There are two types of consumers in Melbourne: students and non-students. The student population is 10, and each student’s
OfficeMax introduces printing paper in smaller packages targeting the students. The non-students are willing to pay 5 for a smaller package and 7 for a standard package, and the students are willing to pay 3 for a smaller package and 4 for a standard package. If a consumer does not purchase, her utility is zero. Find all the prices, Pn for a smaller package and Ps for a standard package, so that the students choose the smaller packages and the non-students choose the standard ones.
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