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= 450 -40Q, and your cost function is C(Q) = 290Q. a. Determine the optimal two-part pricing strategy. Per-unit fee: $ Fixed fee: $ 8 ☑ 320 b. How much additional profit do you earn using a two-part pricing strategy compared with charging this consumer a per-unit price? 450 $

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= 450 -40Q, and your cost function is C(Q) = 290Q. a. Determine the optimal two-part pricing strategy. Per-unit fee: $ Fixed fee: $ 8 ☑ 320 b. How much additional profit do you earn using a two-part pricing strategy compared with charging this consumer a per-unit price? 450 $

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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