--%>
Assignment Help - homework help

price discriminate

A monopolist selling several di erent products can sometimes "price discriminate" by bundling her products together. Here's an example. Suppose the U of C is planning to o er a series of two concerts. The rst program in the series consists of music by Chopin; the second, music by Stravinsky. There are four types of patrons with the following reservation prices (willingness to pay) for the concerts:

 Romantic Type: $40 for Chopin, $20 for Stravinsky  Modern Type $20 for Chopin $40 for Stravinsky

 Chopin Lover $45 for Chopin $5 for Stravinsky

 Stravinsky Lover $5 for Chopin $45 for Stravinsky

Suppose for simplicity that there is only one individual of each type and everyone can be accom-

modated at either performance. Also suppose the U of C does not know any individual's given

type.

(a) Suppose rst that separate tickets are o ered for the two concerts. What is the pro t

maximizing price per ticket?

(b) Suppose that only a single ticket for the series is o ered. What is the pro t maximizing

price for a series ticket? Have pro ts increased? What is the intuition for this result?

(c) Can you nd a more pro table alternative?

   Related Questions in Microeconomics

  • Q : Labor Contracts-Agreement of shops I

    I have a problem in economics on Labor Contracts-Shop Agreements. Please help me in the following question. The union leaders would tend to favor the contract clause needing: (1) A sweat shop. (2) An agency shop. (3) A union shop. (4) An open shop.

    		•
  • Q : Problem on buying a used car You desire

    You desire to purchase a used car. The dealer knows accurately how well the car works and how much it must cost, although you are not sure of its value. This is an illustration of: (i) Asymmetric information. (ii) Dealer rights. (iii) Predatory pricing. (iv) First mov

    		•
  • Q : Collective Bargaining-Check off

    When a collective bargaining contract comprises a ‘check-off provision’ then: (1) Union workers can be fired if they don’t meet production quotas. (2) Firms collect the union dues by deducting them from pay-checks. (3) Workers are needed to do just t

    		•
  • Q : Price discrimination to increase

    A firm can practice price discrimination to increase its profitability when this: (w) confronts a perfectly elastic demand curve. (x) is a pure quantity adjuster. (y) has some market power and is able to separate its customers into various groups alon

    		•
  • Q : Question on demand and supply Refer to

    Refer to the following diagram. A decrease in supply is illustrated by a: A) move from point x to point y. B) shift from S1 to S2. C) shift from S2 to S1. D) move from point y to point x.

    Q : Division of labor advantages for workers

    The advantages from the division of labor are improved as workers: (1) Are protected by the barriers which limit the international trade. (2) Who each recognize all facets of production gain an enhanced understanding of the whole project. (3) Constant

    		•
  • Q : Price hike in short run I have a

    I have a problem in economics on Price hike in short run. Please help me in the following question. In short run, the demand curve for the potatoes will not be influenced by price hikes for: (i) Potatoes. (ii) Bread. (iii) Rice. (iv) Steak.

    Q : Monopoly a monopolist has two plants

    a monopolist has two plants with two different cost functions.given output for one plantis given how do calculate output for the other plant?

    		•
  • Q : Firms and Transaction Costs An

    An individual or organization which simultaneously purchases low and sells high in various markets is a/an: (i) Angel duster. (ii) Escalator. (iii) Arbitrageur. (iv) Finagler.  (v) Optimizer. Can someone please help me in find

    		•
  • Q : What is the meaning of ex-ante savings

    Meaning of ex-ante savings: Ex-ante savings are expected savings or planned savings.

    		•