Unformatted text preview: Inverse demand curve: P s = 76 – Q s Marginal revenue curve: MR s = 76 - 2Q s Non-student market Inverse demand curve: P n = 128 - 2Q n Marginal revenue curve: MR n = 128 - 4Q n Cost of production Assume that The Economist has the following cost function: TC = 250,000 + 20Q a) Determine the MC of The Economist . b) What would be the desired allocation of six-monthly subscriptions between the two markets, and what would be the price they should charge for student and non-student subscribers? (Assume that The Economist wishes to maximize profits.) In other words, given that they can practice price discrimination in the market, how many tickets should The Economist sell in each market, and at what price? c) If these new prices are implemented, how will prices change for students and non-students? d) How has total revenue changed for The Economist ? Assume that the total amount of six-monthly subscriptions remains unchanged....
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This test prep was uploaded on 02/20/2009 for the course AEM 4150 taught by Professor Kaiser,h.m. during the Fall '07 term at Cornell.
- Fall '07