Consider the following market, in which four people each have a different willingness to pay for...

 

Transcribed Image Text:

Consider the following market, in which four people each have a different willingness to pay for a Penn State jacket. Willingness to Pay for a Penn State Jacket Person Willingness to Pay Frank $15 Ginny $19 Hampton $26 Izzy $30 a. If the firm CANNOT price discriminate and must charge the same price for each unit, what price should it choose to maximize revenue? Hint: Remember that total revenue is TR = P x Q. At each possible price, think about the quantity purchased, and then find total revenue. The single price the firm should charge for each Penn State sweatshirt is $ . Do not include the dollar sign ($) in your answer. b. Now suppose the firm is able to use perfect price discrimination. What will be the total revenue earned by the firm? Do not include the dollar sign ($) in your answer. Consider the following market, in which four people each have a different willingness to pay for a Penn State jacket. Willingness to Pay for a Penn State Jacket Person Willingness to Pay Frank $15 Ginny $19 Hampton $26 Izzy $30 a. If the firm CANNOT price discriminate and must charge the same price for each unit, what price should it choose to maximize revenue? Hint: Remember that total revenue is TR = P x Q. At each possible price, think about the quantity purchased, and then find total revenue. The single price the firm should charge for each Penn State sweatshirt is $ . Do not include the dollar sign ($) in your answer. b. Now suppose the firm is able to use perfect price discrimination. What will be the total revenue earned by the firm? Do not include the dollar sign ($) in your answer.

Answer rating: 100% (QA)

a To maximize revenue when the firm cannot price discriminate it should set the p... View the full answer