Unformatted text preview: Inverse demand curve: P s = 76 – Q s Marginal revenue curve: MR s = 76  2Q s Nonstudent 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 sixmonthly subscriptions between the two markets, and what would be the price they should charge for student and nonstudent 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 nonstudents? d) How has total revenue changed for The Economist ? Assume that the total amount of sixmonthly 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
 KAISER,H.M.

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