--%>
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 : Stabilization function Choose the right

    Choose the right answer of thefollowing problem. In performing its stabilization function, it may be appropriate for the nation's central bank (the Federal Reserve in the United States) to take actions to: A) increase taxes to reduce inflation. B) increase interest ra

    		•
  • Q : Illustrations of homogeneous goods

    Illustrations of homogeneous goods would not comprise: (i) wheat. (ii) athletic shoes. (iii) penicillin. (iv) generic bleach. (v) reams of generic printer paper. I need a good answer on the topic of Economi

    		•
  • Q : Wealth distribution by income When line

    When line 0C0' shows the 2005 U.S. income distribution, in that case the line that would shows the 2005 wealth distribution would be probably line: (1) line 0A0'. (2) line 0B0'. (3) line 0C0'. (4) line 0D0'. (5) line 0E0'.

  • Q : Uniting individual sellers of labor Can

    Can someone help me in finding out the right answer from the given options. Economically, the labor unions can be thought of as: (1) Motivating competition between workers for jobs. (2) Raising the flexibility of the nominal wages. (3) Attempts to cartelize and unite

    		•
  • Q : International federal or agreements and

    Consider goods for that various people are willing and capable to pay much more than the costs of production therefore widespread shortages exist. International federal or agreements, state and local laws as well as regulations are probably key factor

    		•
  • Q : Least consistency for law of demand The

    The demand curve for socket sets from the list below which is least consistent along with the law of demand is: (w) demand curve D1D1. (x) demand curve D2D2.  (y) demand curve D3D3

    		•
  • Q : Price elasticity of demand DVDs of games

    Moving from point c to point d beside demand curve D, the price elasticity of demand DVDs of video games equals: (1) 0.8. (2) one. (3) 1.10. (4) 1.25. (5) 2.50

    Q : Internet connection system in Short Run

    The resource most probable to be viewed as the fixed in short run by a firm which operates a cable TV and Internet connection system would be: (1) Unskilled workers who bury the cable. (2) The personal computer (3) Satellite dishes that it has leased to the customers.

    		•
  • Q : Employment distinguish between full

    distinguish between full employment and under employment

    		•
  • Q : Engage market power in price

    If this is possible, firms along with market power engage in price discrimination to: (i) defy civil rights legislation. (ii) help consumers. (iii) help the community. (iv) increase their profits. (v) reduce production costs.