ajaz_eco_204_2012_2013_chapter_17__18_PP

# Eco 204 s ajaz hussain do not distribute f assume

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Unformatted text preview: on in ECO 204 (this version 2012-2013) University of Toronto, Department of Economics (STG). ECO 204, S. Ajaz Hussain. Do not distribute. This implies: ( ) Notice that: The possibility of arbitrage forces a narrowing of the price differential. 29 ECO 204 Chapter 17 & 18: Practice Problems & Solutions for Firms with Market Power: Business Apps and Price Discrimination in ECO 204 (this version 2012-2013) University of Toronto, Department of Economics (STG). ECO 204, S. Ajaz Hussain. Do not distribute. (f) Assume Division 1’s demand function is and Division 2’s demand function is st What are Division 1 and 2’s optimal 1 degree price discrimination outputs and prices if there is no possibility of arbitrage between the two division’s markets? Show all calculations below. Answer In this case, each division will produce upto where . . Under 1st degree price discrimination: For division 1: () At this output, the according to: is \$2. Thus, division 1 will sell 219.6 units from a high price of \$2,000 to a low price of \$2 For division 2: () At this output, the is 8(222.2) = 1,777.6. Thus, division 2 will sell 222.22 units from a high price of \$2,000 to a low price of \$1,777.6 according to: 30 ECO 204 Chapter 17 & 18: Practice Problems & Solutions for Firms with Market Power: Business Apps and Price Discrimination in ECO 204 (this version 2012-2013) University of Toronto, Department of Economics (STG). ECO 204, S. Ajaz Hussain. Do not distribute. Question 17.4 Founded in January 2010, Dulce & Havana (D & H) designs and manufactures high end men’s jackets right here in Toronto. The inputs for D & H jackets are fixed labor (tailors), fixed capital (machines), and variable materials. Once manufactured, the jackets are sold at a uniform price to 10 individual customers in NYC; at a uniform price to 5 individual customers in Boston; and at a uniform price to the Harry Boor-son store on Bloor Street in Toronto. The marginal cost of distribution to NYC is \$300...
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## This document was uploaded on 01/19/2014.

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