« previous next »

Author Question: A monopolist sells to two consumer groups, students and non-students. Demand for students: Q = ... (Read 143 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?

Though methadone is often used to treat dependency on other opioids, the drug itself can be abused. Crushing or snorting methadone can achieve the opiate "rush" desired by addicts. Improper use such as these can lead to a dangerous dependency on methadone. This drug now accounts for nearly one-third of opioid-related deaths.

Did you know?

Only 12 hours after an egg cell is fertilized by a sperm cell, the egg cell starts to divide. As it continues to divide, it moves along the fallopian tube toward the uterus at about 1 inch per day.

Did you know?

The immune system needs 9.5 hours of sleep in total darkness to recharge completely.

Did you know?

Blastomycosis is often misdiagnosed, resulting in tragic outcomes. It is caused by a fungus living in moist soil, in wooded areas of the United States and Canada. If inhaled, the fungus can cause mild breathing problems that may worsen and cause serious illness and even death.

Did you know?

Intradermal injections are somewhat difficult to correctly administer because the skin layers are so thin that it is easy to accidentally punch through to the deeper subcutaneous layer.

A seashell vendor in Tanzania sells to tourists seashells which have been taken from the sea alive, A seashell vendor in Tanzania sells to tourists seashells which have been taken from the sea alive,
Functional groups Functional groups
To help his students understand the term generalized other, Mead used baseball as an illustration. ... To help his students understand the term generalized other, Mead used baseball as an illustration. ...
U.S. Racial-Ethnic Groups U.S. Racial-Ethnic Groups
Religious Groups: From Hostility to Acceptance Religious Groups: From Hostility to Acceptance
The introduction of a new generation of electric and hybrid cars will reduce the demand for oil The introduction of a new generation of electric and hybrid cars will reduce the demand for oil
Video: Hyperglycemia Animation

For a complete list of videos, visit our video library