third degree price discrimination

Firm A has no costs of production and sells its products to just two buyers. The buyers (1 and 2) have the following demand functions:

P1 = 90 -10q₁

P2 = 60 - 5q₂

(a) Assuming that the rm can engage in third degree price discrimination, nd the profit maximizing prices. What is the rm's prot?

(b) Now, suppose that the monopolist can engage in multi-part pricing. Find a two part price schedule that generates more prot than the rm gets under third degree price discrimination. How much additional profit does it earn?

View Complete Question

Related Questions in Microeconomics

Q : Market Adjustments in outputs and

Outputs and average prices for CDs and DVDs both rose throughout 1999 to 2000 (just before file sharing became ordinary), implying such that: (1) supply of prerecorded music should have grown. (2) law of demand does not apply to music. (3) demand for

Q : Market power and excess capacity A

A monopolist which does not price discriminate cannot concurrently maximize profit and: (w) charge a price equal to marginal cost. (x) minimize average cost. (y) charge a price equal to minimum average cost. (z) produce only zero econ

Q : Maximum possible profitable firm A firm

A firm possessing important market power may suffer by managerial slack [X-inefficiency] and unessential high costs, which implies that, the firm: (i) is likely to be absorbed through a predatory rival. (ii) realizes less than the max

Q : Satisfaction gained from consuming

The Law of Diminishing Marginal Utility defines that the: (i) Satisfaction gained from consuming additional units of a good ultimately decline. (ii) Extra cost of energy from the public utility will ultimately decline. (iii) MUa/Pa = MUb/Pb = ... = MUz/Pz. (iv) Ux/X =

Q : Principal-Agent Problems instance An

An instance of the principal-agent trouble would be: (i) The student failing an exam since he did not study. (ii) The crook being caught as he made much noise. (iii) My son purchase baseball cards with the money I gave him to purchase milk for t

Q : Average variable costs with marginal

All profit maximizing firms which are not shut down since demand never exceeds average variable costs will make where marginal revenue as: (w) excludes average revenue. (x) equals average variable cost. (y) equals mar

Q : Strategic Barriers to Entry The

The successful employment of expensive marketing techniques through established competitors in an oligopoly: (w) encourages entry by other profit maximizing firms. (x) raises the minimum efficient scale of production for new entrants. (y) acts as a re

Q : Sets of complementary goods Sets of

Sets of complementary goods comprise: (w) pipes, chewing tobacco, and snuff. (x) gasoline, diesel, and gasohol. (y) swimsuits, diving boards, and swimming pools. (z) Jacuzzis, saunas, and steam baths. Hello guys I

Q : Problem on Monopsonistic exploitation I

I have a problem in economics on Monopsonistic exploitation. Please help me in the following question. The Monopsonistic exploitation of labor signifies that the: (i) Influenced workers receive much low wages. (ii) Firm reaps big economic gains by exploiting the worke

Q : Unitarily elasticity in supply curve At

At point b, in demonstrated figure the supply curve into this graph is: (w) perfectly elastic. (x) elastic, but not perfectly that why. (y) unitarily elastic. (z) inelastic.

Discover Q & A

Leading Solution Library

Avail More Than 1429722 Solved problems, classrooms assignments, textbook's solutions, for quick Downloads

No hassle, Instant Access

Start Discovering

18,76,764

1930570
Asked

3,689

Active Tutors

1429722

Questions
Answered

Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!

Submit Assignment