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Homework2

# Homework2 - Table 1 Willingness to Pay for ePhone Homer...

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Table 1: Willingness to Pay for ePhone Homer Marge Bart Lisa Maggie Moe Selma willingness to pay 600 550 800 630 50 300 700 Homework #2 Due Date: Wednesday, March 9th Note: Only one randomly selected question will be graded. Question 1 Banana Co. makes ePhone, which is one of the most popular cell phone in the market. Each person needs only one cell phone, thus, buys only one machine. Tem- porarily assume that there are only 7 people, who are interest in ePhone. The willingness to pay of people is listed in the Table 1. (a) Banana Co. set the price of ePhone at 699. Who will buy ePhone? Calculate the total consumer surplus. (b) From now on, assume that people will buy one if the price is equal to her will- ingness to pay. That is, Bart will buy if the price is 800. When the price is 600, calculate consumer surplus and total revenue of Banana Co. (c) What is the maximum price if Banana Co. wants to sell at least 5 ePhones? (d) The unit cost for Banana Co. to produce an ePhone is 200. Then, what is the total profit at the price level obtained at (c)?

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Homework2 - Table 1 Willingness to Pay for ePhone Homer...

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