Question

You are the manager of a monopoly. A typical consumer’s inverse demand function for your firm’s product is P = 250 – 40Q, and your cost function is C(Q) = 10Q.
a. Determine the optimal two- part pricing strategy.
b. How much additional profit do you earn using a two- part pricing strategy compared with charging this consumer a per- unit price?



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  • CreatedApril 18, 2014
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