Key to Problem Set_5

Key to Problem Set_5 - Key Problem Set#5 1 Suppose the...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Key Problem Set #5 1. Suppose the demand functions facing a wireless telephone monopolist in worked-out problem 18.4 (p. 688) are instead Q d L = 40 – 100 P for each low-demand consumer and Q d H = 120 -100 P for each high-demand consumer, where P is the per-minute price in dollars. The marginal cot is 10 cents per minute. (a) Suppose the monopolist offers only a single two-part tariff. What will be the monopolist’s profit from each type of consumer if it charges a per-minute price of 10 cents and a fixed fee that causes both types of consumer to make a purchase? Graph the demand curves and show how you arrived at your answer. (b). What will be the monopolist’s profit if it charges a per-minute price of 20 cents and a fixed fee that causes both types of consumer to make a purchase? Graph the demand curves and show how you arrived at your answer. (c) If there are 100 high-demand consumers, how many low-demand consumers can there monopolist serve and find the 20-cent-per-minute price more profitable than the 10-cent price? monopolist serve and find the 20-cent-per-minute price more profitable than the 10-cent price?...
View Full Document

{[ snackBarMessage ]}

Page1 / 3

Key to Problem Set_5 - Key Problem Set#5 1 Suppose the...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online