5.
If the firm can practice first-degree price discrimination, it will be able to collect $________ in total
revenue under perfect price discrimination.
A. $1,872
B. $1,936
C. $7,744
D. $9,856
E. none of the above
6.
If the firm can practice first-degree price discrimination, it can make a maximum profit of
A. $1,872.
B. $1,936.
C. $7,744.
D. $9,856.
In the next 9 questions, a firm sells its product to two groups of buyers: daytime buyers and nighttime
buyers. There are 50 daytime buyers, all of whom have identical demands given by
D
D
in the figure below.
There are 50 nighttime buyers, all of whom have identical demands given by
D
N
in the figure below. The
firm's variable costs are constant (
SMC
=
AVC
= $12) and its total fixed cost is $250,000. The marketing
director must devise a two-part pricing plan that will maximize the firm's profit.
7.
Suppose the marketing director ignores the nighttime market and wishes to extract all consumer surplus
from the daytime buyers. The optimal access charge is $_________ and the optimal usage fee is $______
per unit.
A.
A*
= $1,000 and
f
* = $12
B.
A*
= $2,400 and
f
* = $12
C.
A*
= $7,744 and
f
* = $12
D.
A*
= $9,856 and
f
* = $12
8.
Suppose the marketing director ignores the nighttime market and wishes to extract all consumer surplus
from the daytime buyers. By setting the optimal access charge and user fee, the firm will earn $_________
of profit on each one of the 50 daytime buyers.
A. $1,872.
B. $1,936.
C. $7,744.
D. $9,856.