Define is this perfect price discrimination

Assignment Help Microeconomics

Reference no: EM13182470

Imagine cell phones are simple and the only thing consumers care about is minutes. Suppose a monopolist wireless company says, "The cell phone and the first 6 minutes are free, and the price of each additional minute is $2." Now suppose your demand for minutes is q(p) = 10 - p

Suppose the firm's marginal cost is $0 and you are the only consumer. What is the sign-up fee, sign-up quantity (i.e. in the above example it was 6 minutes), and price per additional minute that maximizes its profit? Is this perfect price discrimination? Why or why not?

Reference no: EM13182470

Questions Cloud

What are some ways that customers affect a firms costs : What are some ways that customers affect a firms costs and what is the objective of joint cost allocation?

On-time technology products : As a CSR, what is your initial reaction to this new-tiered service plan by Mr. MacGibson and what would be some advantages/disadvantages of going to a tiered service approach at On-Time Technology Products?

Environmental protection agency : Does the filing of the lien by the EPA (Environmental Protection Agency) under CERCLA constitute a taking, violating the Reardon's of their due process rights without a hearing?

Why is it a good pricing strategy for the firm : Pick a real-life rm that bundles products in some way. Describe how this pricing function is a form of price discrimination; in other words, why do some consumers effectively "pay more" for a particular product than other consumers do? Why is it a..

Define is this perfect price discrimination : Imagine cell phones are simple and the only thing consumers care about is minutes. Suppose a monopolist wireless company says, "The cell phone and the first 6 minutes are free, and the price of each additional minute is $2." Now suppose your deman..

What is the effect of wage indexation on the inflation : Compute the natural rate of unemployment. Does it depend on the way people form their expectations of inflation? 2. Discuss the way people form expectations of inflation is modeled. 3. Compute the rate of inflation for years t, t+1, t+2 and t+3. 4. N..

Explain the mass percentage of iodine in the compound : The mass percentage of iodine in the compound was determined by converting the iodine in a 0.850 g sample of the compound into 2.31 g of lead(II) iodide. What is the empirical formula of the compound? Could the compound also contain oxygen?

Determine will jack work for more hours : a. Jack consumes two goods: food and leisure. He works for 8 hours per day and earns a wage of $8 dollars per hour. His rich uncles also give him around $20 per day. Illustrate Jack's choice of work and leisure using an indifference curve and a b..

Explain what is the overall mechanism for the reaction : Recrystallization from 95% ethanol gave yellow crystals. What is the overall mechanism for this reaction including all arrows, the identification of the electrophile and nucleophile, and all charges?

User Account

All Pages