# Question: Assume that the quantity discriminating monopoly in panel a of

Assume that the quantity- discriminating monopoly in panel a of Figure 10.4 can set three prices, depending on the quantity a consumer purchases. The firm’s profit is

p = p1Q1 + p2(Q2 - Q1) + p3(Q3 - Q2) – mQ3,

where p1 is the high price charged on the first Q1 units ( first block), p2 is a lower price charged on the next Q2 – Q1 units, p3 is the lowest price charged on the Q3 – Q2 remaining units, Q3 is the total number of units actually purchased, and m = $ 30 is the firm’s constant marginal and average cost. Use calculus to determine the profit- maximizing p1, p2, and p3.

p = p1Q1 + p2(Q2 - Q1) + p3(Q3 - Q2) – mQ3,

where p1 is the high price charged on the first Q1 units ( first block), p2 is a lower price charged on the next Q2 – Q1 units, p3 is the lowest price charged on the Q3 – Q2 remaining units, Q3 is the total number of units actually purchased, and m = $ 30 is the firm’s constant marginal and average cost. Use calculus to determine the profit- maximizing p1, p2, and p3.

**View Solution:**## Answer to relevant Questions

In the nonlinear price discrimination analysis in panel a of Figure, suppose that the monopoly can make consumers a take- it-or-leave-it offer. a. Suppose the monopoly sets a price, p*, and a minimum quantity, Q*, that a ...Joe in Question 5.3 marries Susan, who is also an enthusiastic golfer. Susan wants to join the Northlands Club. The manager believes that Susan’s inverse demand function is p = 100 – 2q. The manager has a policy of ...Based on the information in Question, determine the profit- maximizing uniform price. Does Paradise Cruises earn a higher profit under peak- load pricing or uniform pricing? Compare consumer surplus under these two pricing ...The state of Connecticut sets a maximum fee that bail-bond businesses can charge for posting a given-size bond (Ayres and Waldfogel, 1994). The bail-bond fee is set at virtually the maximum amount allowed by law in cities ...Your college is considering renting space in the student union to one or two commercial textbook stores. The rent the college can charge per square foot of space depends on the firms’ profit (excluding rent) and hence on ...Post your question