Suppose the demand equation facing a firm is Q = 300 – 2P, MR = 150 – Q, and MC = $30. 

a.Compute the maximum profit if the firm charges a single price for all units. 

b.Suppose the firm offers “quantity discount” such that the first 60 units are sold at a price of $120, and further units at a price of $80. Compute the amount of profit if the quantity discount is implemented. 

c.If the firm implemented a two-part pricing strategy, what would be the fixed fee, variable fee, total revenue, and the total variable cost? 

d.Which pricing strategy (a, b, or c) generates the largest amount of profit? Explain why.

Answer rating: 100% (QA)

A To maximize profits the firm equates MRMC Given MR 150 Q and MC 30 So 150 Q ... View the full answer