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Unformatted text preview: Key Problem Set #5 1. Suppose the demand functions facing a wireless telephone monopolist in workedout problem 18.4 (p. 688) are instead Q d L = 40 – 100 P for each lowdemand consumer and Q d H = 120 100 P for each highdemand consumer, where P is the perminute price in dollars. The marginal cot is 10 cents per minute. (a) Suppose the monopolist offers only a single twopart tariff. What will be the monopolist’s profit from each type of consumer if it charges a perminute 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 perminute 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 highdemand consumers, how many lowdemand consumers can there monopolist serve and find the 20centperminute price more profitable than the 10cent price? monopolist serve and find the 20centperminute price more profitable than the 10cent price?...
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 Spring '07
 Eastin
 Business, Supply And Demand, total profit, best response function, perminute price

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