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Why are you willing to pay the admission charge

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Reference no: EM131685501

Question: Your personal demand curve for a good sold by a monopolist is depicted in the following table:

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a. The salesperson first quotes you a price of $6, and you respond by buying 5 units. Just as you are about to leave he offers you a sixth unit for $5. Why do you accept this offer? Again, you are about to leave and he offers you a seventh unit for $4. You also take this offer, right? Why?

b. Next week you return to the monopolist and see a sign: "New pricing policy: pay a $21 admission charge and then you can buy all you want for $4 per unit." Why are you willing to pay the admission charge rather than walk away? After you pay, you buy 7 units. Why are you willing to pay $21 + $28 = $49 for 7 units this week, when last week you paid only $39 for them?

Reference no: EM131685501

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