You are the manager of a monopoly. Your analytics department estimates that a typical consumer's inverse demand function for your firm's product is P = 350-20Q and your cost function is C(Q) = 70Q. a. Determine the optimal two-part pricing strategy (optimal meaning most profitable) Per Unit Fee:$___ (do not round intermediate numbers, include two decimals) Fixed Fee $____ (do not round intermediate numbers, include two decimals) b. How much additional profit do you earn using a two-part pricing strategy compared with charging this consumer a per-unit price?
You are the manager of a monopoly. Your analytics department estimates that a typical consumer's inverse
a. Determine the optimal two-part pricing strategy (optimal meaning most profitable)
Per Unit Fee:$___ (do not round intermediate numbers, include two decimals)
Fixed Fee $____ (do not round intermediate numbers, include two decimals)
b. How much additional profit do you earn using a two-part pricing strategy compared with charging this consumer a per-unit
PLEASE SHOW ALL WORK AND CALCULATIONS
In this question we have to find out optimal two-part pricing strategy with the help of the above information.
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