Suppose that in the entire land of Econworld, there is only a single producer of lap-...

 

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Suppose that in the entire land of Econworld, there is only a single producer of lap- tops, which faces the following total cost curve: TC = 500Q (their marginal cost curve is thus MC = 500). There are two types of consumers in the market: laptop-obsessed consumers, who all together have the inverse demand curve for laptops P = 750-%; and laptop-tolerant consumers, who all together have the inverse demand curve for Q laptops P = 600 - 100* (a) Suppose first that the producer is unable to differentiate between the two types of consumers, and can only charge a single price. What is their profit maximizing level of output? What will the price be at this point? How large are profits and total consumer surplus at this point? (b) Suppose now that the producer is able to differentiate between the two types of consumers, and is allowed to charge two different prices for laptops - one to the laptop-obsessed group and another to the laptop-tolerant use group. What will those prices be? What will the total consumer surplus be? What will the producer's profit be? (c) Redo part (a) of this question, but now assuming the inverse demand curve of laptop-tolerant consumers is P = 500 - 100. Q Suppose that in the entire land of Econworld, there is only a single producer of lap- tops, which faces the following total cost curve: TC = 500Q (their marginal cost curve is thus MC = 500). There are two types of consumers in the market: laptop-obsessed consumers, who all together have the inverse demand curve for laptops P = 750-%; and laptop-tolerant consumers, who all together have the inverse demand curve for Q laptops P = 600 - 100* (a) Suppose first that the producer is unable to differentiate between the two types of consumers, and can only charge a single price. What is their profit maximizing level of output? What will the price be at this point? How large are profits and total consumer surplus at this point? (b) Suppose now that the producer is able to differentiate between the two types of consumers, and is allowed to charge two different prices for laptops - one to the laptop-obsessed group and another to the laptop-tolerant use group. What will those prices be? What will the total consumer surplus be? What will the producer's profit be? (c) Redo part (a) of this question, but now assuming the inverse demand curve of laptop-tolerant consumers is P = 500 - 100. Q

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a The profitmaximizing level of output is 500 since that is the point where the marginal cost curve ... View the full answer