Firm wants to use two-part pricing strategy

Assignment Help Business Economics

Reference no: EM131091925

A firm has estimated that the demand for its product comes from two types of customers, type I and type II. Each type I customer -there are 30 of them- has a demand curve given by Q = 20 - P, while each type II customer -there are 50 of them- has a demand curve given by Q = 15 - P. The firm's marginal cost is constant and equal to $5. Suppose the firm wants to use a two-part pricing strategy (T; P), and it has decided to set P = $5 (we know this need not be optimal, but this is what the firm has decided to set). With P= $5, the profit-maximizing T is

Reference no: EM131091925

Questions Cloud

Long run equilibrium price if market was competitive : The average total cost of a monopolistic firm is AT C = 80/Q + 20Q. The firm is facing the demand function given by P = 6000 − 20Q. a) What will be the total profit that this firm will generate if it chooses price and quantity optimally?(Profit=22492..

About four basic classifications of evidence : This week's reading (Chapters 3 and 4 of the text), starts to answer the question: "What is digital evidence?" - not in the physical sense but in the legal sense. The text then discusses what steps you should take to identify and collect it.

Competitive nature of consumer products industry : What strategies are proposed in the Babson College competition to obtain control over market price? Given the competitive nature of consumer products industry, why do you believe firms spend millions on Super Bowl and other primetime ads? How would a..

Identify applicants qualified to fill specific positions : This assignment will help you define key jobs and strategies to identify applicants qualified to fill specific positions.

Firm wants to use two-part pricing strategy : A firm has estimated that the demand for its product comes from two types of customers, type I and type II. Each type I customer -there are 30 of them- has a demand curve given by Q = 20 - P, while each type II customer -there are 50 of them- has a d..

Trade union in restricting the supply of physicians : The AMA has often been thought to behave like a trade union in restricting the supply of physicians in order to keep earnings high. What evidence is there that the AMA has acted this way? Essential of Health Economics Second Edition Diane M. Dewar

Requirements for coverage for domestic partners : How do the requirements for coverage for domestic partners, such as length of the relationship compare with requirements for benefits of married couples?

Discount policy and reserve requirements : How well do the monetary policies enacted by the Fed regulate the national economy? Which of the monetary policy tools -- Open Market Operations, Discount Policy and Reserve Requirements -- seems to be most effective?

How long has it been since job growth was this weak : Nearly half a million people dropped out of the workforce last month, dragging down the share of Americans participating in the labor force by 0.2 percentage

User Account

All Pages