Optimal two-part pricing strategy

Assignment Help Business Economics

Reference no: EM131194434

You are the manager of a monopoly. A typical consumer’s demand for your firm’s product is given by

P = 100 – 20Q

and your cost function is C = 20Q.

a) Determine the optimal two-part pricing strategy.

b) How much additional profit do you earn using a two-part pricing strategy compared with charging this consumer a per-unit price?

Reference no: EM131194434

Questions Cloud

What is simple payback period of this proposed investment : A 2,000 square foot house in New Jersey costs $1,725 each winter to heat with its existing oil-burning furnace. For an investment of $5,000, a natural gas furnace can be installed, and the winter heating bill is estimated to be $1,000. If the homeown..

Why do you think this is called pigouvian : Imagine that you live in a flat and some new people move in next door who like playing loud music late at night. Imagine that you don’t like loud music late at night. In what way is this an externality? Governments often put constraints around when l..

What happens to the no-trade relative price of what : Consider a two-country (Home and Foreign) two-good world (wheat and cloth). Let MPLw and MPLc be 4 and 2, respectively. Let L=25. Suppose that the number of workers doubles in Home. What happens to the Home PPF and what happens to the no-trade relati..

Considering several units of homogeneous product : A monopoly is considering several units of a homogeneous product as a single package. Determine the optimal number of units to put in a package. How much should the firm charge for this package?

Optimal two-part pricing strategy : Determine the optimal two-part pricing strategy. How much additional profit do you earn using a two-part pricing strategy compared with charging this consumer a per-unit price?

Example of which stage of the financial reimbursement cycle : The institution of payment according to one of eighty home health resource groups (HHRGs) limits the payments to a provider over a 60 day period. No matter how many times a provider visits a home during the 60 day period, the price remains at the HHR..

Large oil multinational toward environmental protection : Drawing upon John Rawls’s concept of the veil of ignorance, develop an ethical code that will (a) guide the decisions of a large oil multinational toward environmental protection, and (b) influence the policies of a clothing company to outsourcing of..

Use non-linear regression specification : We want to use a non-linear regression specification for all the following reasons except:

What is the mark-up percentage of selling price : Jenny is starting a bakery and needs some help with pricing the muffins. Since she knows you have studied pricing, please help her to determine the following. The muffins cost $0.35 to produce. She would like to sell them for $1.20. What is the mark-..

User Account

All Pages