--%>
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 : Demography of Wealth and Poverty

    Poverty within the United States can be explained most properly by: (w) differences in effort and sacrifice. (x) voluntary choices of low income persons to consume more leisure at the expense of more income. (y) monopsonistic exploitation of labor by

    		•
  • Q : Llustration of the problem of Moral

    Can someone please help me in finding out the accurate answer from the following question. Failing to lock your door whenever you go out since you have theft insurance is an illustration of the trouble of: (1) Indifference. (2) Apathy. (3) Moral hazard. (4) Market pow

    		•
  • Q : Define excess demand Excess demand : If

    Excess demand: If AD > AS at the full employment level. Then it is termed as Excess demand.

    		•
  • Q : Liabilities for damages and penalties

    Can someone please help me in finding out the accurate answer from the following question. The Caveat venditor is an ancient legal doctrine which encourages: (i) Consumer exploitation. (ii) a ‘buyers beware’ approach. (iii) Enforcement of the seller’

    		•
  • Q : Employed Currency in 1700s In 1700s

    In 1700s what currency was employed?

    		•
  • Q : Income Distribution and Satisfaction

    The proposition which taxing the rich to provide to the poor improves social welfare can’t be proved due to the impossibility of: (1) developing a political consensus about efficient redistribution programs. (2) the marginal utility of income di

    		•
  • Q : Labor Union-union membership The basic

    The basic idea that unions are more influential than ever before is: (i) Supported by the consequences of unions on inflationary spirals. (ii) Reflected in the growing numbers of violent and expensive strikes. (iii) Contrary to the fact that union membership is refusi

    		•
  • Q : Relative Income Measurement by

    The Department of the Census explains low relative income as experienced while families: (w) lack sufficient income to buy the fundamental food clothing and shelter required for survival. (x) would like to improve the

    		•
  • Q : Absolute value of price elasticity of

    The absolute value of price elasticity of demand is generally greater when there: (w) are fewer uses for the good. (x) is more time permitted for buyers to adjust. (y) are fewer substitutes for the good. (z) is a lower elasticity of s

    		•
  • Q : Problem on harvesting-Production Can

    Can someone help me in finding out the right answer from the given options. The speculator who purchases wheat at harvest time throughout the late falls or early on winter, contracts for its storage, and then vends the wheat afterward in the winter, spring or in summe

    		•