« previous next »

Author Question: A monopolist sells to two consumer groups, students and non-students. Demand for students: Q = ... (Read 192 times)

dejastew

  • Hero Member
  • *****
  • Posts: 562
on: Jul 1, 2018
A monopolist sells to two consumer groups, students and non-students.
 
  Demand for students: Q = 500 - 1/2P
   Demand for non-students: Q = 750 - 2P
   MC = 20
 
  Find the profit-maximizing price/quantity combination in each market if the groups can be separated.

Question 2

Because firms selling a homogeneous product set price in response to the (perceived) pricing decision of other firms in the Bertrand Model of oligopoly in equilibrium price exceeds marginal cost.
 
  Indicate whether the statement is true or false


jaykayy05

  • Sr. Member
  • ****
  • Posts: 329
Reply #1 on: Jul 1, 2018
Answer to Question 1

Students:
P = 1000 - 2Q
MR = 1000 - 4Q
Set MR = MC. 20 = 1000 - 4Q
245 = Q, P = 510

Non-students:
P = 375 - 1/2 Q
MR = 375 - Q
Set MR = MC. 20 = 375 - Q
355 = Q, P = 197.50

Answer to Question 2

False. Because firms set price and sell a homogeneous product other firms will always set price lower if a firm prices above marginal cost. In equilibrium all firms charge P=MC (same as the competitive equilibrium)


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

Calcitonin is a naturally occurring hormone. In women who are at least 5 years beyond menopause, it slows bone loss and increases spinal bone density.

Did you know?

Many of the drugs used by neuroscientists are derived from toxic plants and venomous animals (such as snakes, spiders, snails, and puffer fish).

Did you know?

Every flu season is different, and even healthy people can get extremely sick from the flu, as well as spread it to others. The flu season can begin as early as October and last as late as May. Every person over six months of age should get an annual flu vaccine. The vaccine cannot cause you to get influenza, but in some seasons, may not be completely able to prevent you from acquiring influenza due to changes in causative viruses. The viruses in the flu shot are killed—there is no way they can give you the flu. Minor side effects include soreness, redness, or swelling where the shot was given. It is possible to develop a slight fever, and body aches, but these are simply signs that the body is responding to the vaccine and making itself ready to fight off the influenza virus should you come in contact with it.

Did you know?

Most women experience menopause in their 50s. However, in 1994, an Italian woman gave birth to a baby boy when she was 61 years old.

Did you know?

Fungal nail infections account for up to 30% of all skin infections. They affect 5% of the general population—mostly people over the age of 70.

Living in groups and the many eyes hypothesis. Living in groups and the many eyes hypothesis.
These top and side views reveal the R groups extending out from the β sheet and emphasize These top and side views reveal the R groups extending out from the β sheet and emphasize
Functional Groups of Vitamin C Functional Groups of Vitamin C
A Tough Economy ...for students A Tough Economy ...for students
Major groups of forest biomes Major groups of forest biomes
Suppose a country imports televisions. The country's supply and demand curves are shown in ... Suppose a country imports televisions. The country's supply and demand curves are shown in ...
Video: Oxygen transport - methods and oxyhemoglobin

For a complete list of videos, visit our video library