ECO100 Assign7 - James E. Pesando Economics 100 Assignment...

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James E. Pesando Economics 100 Assignment #7 Imperfect Competition and Price Discrimination 1. TotsPoses is the only photography business in town that specializes in portraits of small children. Sven, who owns and runs TotsPoses, expects to encounter an average of eight customers per day, each with a reservation price (a willingness to pay) shown in the following table. Customer Reservation Price ($/photo) A 50 B 46 C 42 D 38 E 34 F 30 G 26 H 22 (a) If the marginal cost of each photoportrait is $12, how much should Sven charge if he must charge a single price to all customers? At this price, how many portraits will Sven produce each day? What will be his profit, if fixed costs are zero? (b) How much consumer surplus is generated each day at this price? (c) What is the socially efficient number of portraits? (d) Sven is very experienced in the business and knows the reservation price of each of his customers. If he is allowed to charge any price he likes to any customer, how many portraits will he produce each day, and what will his profit be? (e)
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This note was uploaded on 12/22/2009 for the course BIGBOOK_01 Bigbook_01 taught by Professor Bigbook_01 during the Spring '09 term at University of Toronto- Toronto.

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ECO100 Assign7 - James E. Pesando Economics 100 Assignment...

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