HW2_e - Theory Section 1 Assume that you are the new manager of a firm selling a good Historically your firm has charged a single price for every unit

# HW2_e - Theory Section 1 Assume that you are the new...

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Theory Section 1) Assume that you are the new manager of a firm selling a good. Historically, your firm has charged a single price for every unit sold as opposed to price discriminate. a. Consider a strategy of using two part tariffs (2 nd degree price discrimination) to sell. Say that every consumer had quantity demanded of 10 units at a price of \$2. i. If you could charge consumers an access fee for the right to purchase your good would, do you have enough information to say what the lowest access fee consumers would be willing to pay? No, I don’t have enough information to say what the lowest access fee consumers would be willing to pay. Because I only know a point, and I do not know the actual function of the demand curve. So I cannot determine the lowest access fee consumers would be willing to pay. ii. What would the demand curve look like to dictate such an access fee? The demand curve will not change and it will be downward sloping.

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