the way to capture all the available consumer surplus is by
maximizing the profit function with respect to price. So I
will go forward with the two part tariff.
.
What if the informed consumers had more inelastic demand than
the uninformed consumers? In one sentence, why?
Two trariffes are
not
necessarily the best strategy. Profits
could indeed be maximized by focusing only on the high-
yield consumers with more inelastic demand.
Empirical section
Question 4
a)

b) c)

d)e)

What I can conclude from the graph above is that the average prices of orange juice in eachbrands are different. The average price: Dominicks < Minute.Maid < Tropicana. And basically thecolored area of each plot in log price is small than that of each plot in normal price, because Itook the natural log of price in log price curve.Question 5i I noticed that the quantity sold and the price are negatively related. Price: Tropicana >minute.maid > dominicks . The quantity they sold: dominicks > minute.maid > Tropicana.Question 6

a)
The elasticity should be -1.60131. and the R squared is 0.2081 which is too low to fit.
b)
Now both the elasticity and intercept are changed. Elasticity changes to approximately -3.13.
c)
elasticity for Dominick is -3.377, and now each brand has different elasticity. And those different
elasticity shows different price sensitivity.
Question 7

a)
b)
c)

d)

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