Reference no: EM133083030
There are two types of consumers: one half of consumers are type 1 (low type) and the other half are type 2 (high type). Type 1's demand curve is q1 = 4 - P, while type 2's demand is given by q2 = 6 - P. Consider a monopolist selling its product to these consumers. Assume that the marginal cost is equal to zero.
However, the firm does not know an individual consumer's type. It only knows that there are two types of consumers with demand curves given as above. Suppose that the firm can offer only a single two-part tariff, (T,P), where T is the lump-sum fee and P is the unit price.
(1) If the firm serves only high type consumers, what should be the optimal two-part tariff, T and P ? Also, compute the resulting profit.
(2) If the firm serves both types of consumers, what is the firm's profit when it offers (T,P)? Find the expression in terms of P only.
(3) Compute P that maximizes the firm's profit in (2). Also, compute the optimal T, as well as the resulting profit.
(4) Compare the profit from (1) and the profit from (3), and determine which two-part tariff will be chosen by the firm. Also, compute the social surplus from the two-part tariff chosen by the firm.
Find a pareto efficient allocation
: 1. Consider an economy with two consumers whose preferences are represented by utilityfunctionsU1= min{x1, y1}andU2= 2x2+y2and the aggregate endowment of 4 unit
|
Explain the moving equilibrium
: Moving Equilibrium. Show the effect of each on the monopoly market equilibrium; you don't need to have exact answers but explain the direction of change i
|
Find the steady-state level of k
: Using the basic setup of the Solow growth model, assuming that the saving rate (s) = 0.18, the rate of capital depreciation (delta, d) is = 0.06
|
Calculate the average tax rate for social security
: Calculate the average tax rate for Social Security at incomes of $25,000, $50,000, $75,000, $100,000, $125,000, and $150,000
|
Compute p that maximizes the firm profit
: There are two types of consumers: one half of consumers are type 1 (low type) and the other half are type 2 (high type). Type 1's demand curve is q1 = 4 - P, wh
|
Development of human capital
: Discuss the extent to which the development of human capital, through health and education in the Caribbean has contributed to the economic development of the r
|
International business cycle and regional business cycles
: Using examples from specific countries or regions, describe recent trends in the international business cycle and regional business cycles.
|
What is the monthly payment
: 1) One is purchasing a new car at the price of $30,000 with a financing option: $5,000 down payment and an annual interest rate of 3% (APR) compounded monthly o
|
Balance of investment account in years
: Andrea's investment account balance is $18,650. She plans to set aside $500 a month, at the end of the month, for the next 5 years.
|