This topic contains a solution. Click here to go to the answer

Author Question: Suppose a monopolist is considering starting a 500,000 advertising campaign. The current demand for ... (Read 138 times)

LaDunn

  • Hero Member
  • *****
  • Posts: 526
Suppose a monopolist is considering starting a 500,000 advertising campaign. The current demand for its product is given by
 
  p = 150 - 3Q
  where Q is the quantity of output in thousands. If the monopolist undertakes the advertising campaign, it expects demand to increase to
   p = 200 - 4Q
  The (non-advertising) cost for the monopolist is C(Q) = 30Q.
  a. Determine whether the monopolist should undertake the advertising campaign assuming that it is correctly anticipating the potential increase in demand.
  b. What is the most the monopolist will invest towards this advertising campaign?

Question 2

Which of the following conditions must be TRUE so that a firm can profitably price discriminate?
 
  A) The firm must be able to identify individual or groups of consumers with different demand curves.
  B) The firm must be able to identify how its consumers' demand curves differ.
  C) The good cannot be easily resold.
  D) All of the above.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

sarah_brady415

  • Sr. Member
  • ****
  • Posts: 328
Answer to Question 1

a. The monopolist's profits without advertising are calculated by:
150 - 6Q = 30
Q = 20
Pi = 20  90 - 30  20 = 1200
By advertising, the gross profit will be:
200 - 8Q = 30
Q = 21.25
Pi = 1806.25
Because the profit rises by more than 500,000, the monopolist will advertise.
b. The difference in gross profits is 606,250, the maximum the monopolist will invest.

Answer to Question 2

D




LaDunn

  • Member
  • Posts: 526
Reply 2 on: Jul 1, 2018
Gracias!


adammoses97

  • Member
  • Posts: 337
Reply 3 on: Yesterday
:D TYSM

 

Did you know?

Egg cells are about the size of a grain of sand. They are formed inside of a female's ovaries before she is even born.

Did you know?

The tallest man ever known was Robert Wadlow, an American, who reached the height of 8 feet 11 inches. He died at age 26 years from an infection caused by the immense weight of his body (491 pounds) and the stress on his leg bones and muscles.

Did you know?

The types of cancer that alpha interferons are used to treat include hairy cell leukemia, melanoma, follicular non-Hodgkin's lymphoma, and AIDS-related Kaposi's sarcoma.

Did you know?

Hypertension is a silent killer because it is deadly and has no significant early symptoms. The danger from hypertension is the extra load on the heart, which can lead to hypertensive heart disease and kidney damage. This occurs without any major symptoms until the high blood pressure becomes extreme. Regular blood pressure checks are an important method of catching hypertension before it can kill you.

Did you know?

Less than one of every three adults with high LDL cholesterol has the condition under control. Only 48.1% with the condition are being treated for it.

For a complete list of videos, visit our video library