Your company sells, coffee, a differentiated product, to two distinct types of customers. Group A and...

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Your company sells, coffee, a differentiated product, to two distinct types of customers. Group A and Group B customers have demand curves and total cost function (TC) given by: QA150.5PA QB = 280 - PB TC = 4Q² a. Assume that a firm separates the customers into the different groups and charges the groups two different prices. Calculate the firm's profit when they price discriminate. b. In the no price discrimination case a firm earns $4, 402.074 in profits. Are profits higher when the firm price discriminates or when it charges both groups the same price? Why might that be? Your company sells, coffee, a differentiated product, to two distinct types of customers. Group A and Group B customers have demand curves and total cost function (TC) given by: QA150.5PA QB = 280 - PB TC = 4Q² a. Assume that a firm separates the customers into the different groups and charges the groups two different prices. Calculate the firm's profit when they price discriminate. b. In the no price discrimination case a firm earns $4, 402.074 in profits. Are profits higher when the firm price discriminates or when it charges both groups the same price? Why might that be?

Answer rating: 100% (QA)

To calculate the firms profit when it price discriminates we need to determine the optimal price and quantity for each group We can do this by maximiz... View the full answer