Use the following information for problems 15-17: Consider a market with two individuals, A and B, whose demand curves are, respectively, QA 100 - Р, Qв served by a monopoly with total cost function TC = 170 – 2P. Assume that income elasticity of demand is zero. This market is 30Q. 15. If the monopoly cannot price discriminate, what would be its price, quantity, and profit? 16. If the monopoly can set different prices for each individual but has to charge the same price for different quantities and units purchased by the same individual (i.e., the monopoly cannot engage in either first or second degree price discrimination), what would be the prices for each individual, quantities they purchase, and the monopoly's profit? 17. Suppose now the monopoly could use a two-part tariff with a uniform entry fee and a uniform price for both individuals after they have paid the fee. If the monopoly keeps its price at the level you found in problem 15 above, what entry fee would maximize its profit and what this profit would be?

Use the following information for problems 15-17: Consider a market with two individuals, A and B, whose demand curves are, respectively, QA 100 - Р, Qв served by a monopoly with total cost function TC = 170 – 2P. Assume that income elasticity of demand is zero. This market is 30Q. 15. If the monopoly cannot price discriminate, what would be its price, quantity, and profit? 16. If the monopoly can set different prices for each individual but has to charge the same price for different quantities and units purchased by the same individual (i.e., the monopoly cannot engage in either first or second degree price discrimination), what would be the prices for each individual, quantities they purchase, and the monopoly's profit? 17. Suppose now the monopoly could use a two-part tariff with a uniform entry fee and a uniform price for both individuals after they have paid the fee. If the monopoly keeps its price at the level you found in problem 15 above, what entry fee would maximize its profit and what this profit 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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