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Questions
ECO101H1 S LEC0101 topic quiz: price discrimination and game-theory
Short answer
Assume quantities need not be integers. You are a profit-maximizing monopolist whose marginal cost equals $10. Each customer has demand MWTP(Q) = 16 – 0.5 x Q. You have chosen the profit-maximizing two-part tariff. How many units does each customer purchase? Round to two decimal places. If your answer is 1.125, enter 1.13.
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Standard Answer
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Approach Analysis
To determine how many units a customer buys under a two-part tariff, we first separate the pricing into a per-unit price and a fixed access fee. The monopolist is profit-maximizing and faces a constant marginal cost of 10. In a two-part tariff, the ......Login to view full explanationLog in for full answers
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