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Author Question: Bob is the only carpet installer in a small isolated town. The above figure shows the demand curves ... (Read 206 times)

Bob-Dole

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on: Jul 1, 2018
Bob is the only carpet installer in a small isolated town. The above figure shows the demand curves of two distinct groups of customers-residential and business. If the marginal cost of installing carpet is a constant 1 per sq yard, what price does Bob charge each segment?
 
  What will be an ideal response?

Question 2

While price discrimination is possible between two markets, it is not possible in more than two.
 
  Indicate whether the statement is true or false
Microeconomics ¦ Perloff ¦ 8th Edition
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jaygar71

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Reply #1 on: Jul 1, 2018
Answer to Question 1

Setting MR = 1 in both markets yields a price of 5.50 in the residential market and 8 in the business market.

Answer to Question 2

False. The number of markets does not matter. All that is required is that markets differ in their respective price elasticity of demand.


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