Question: Use the information provided below for Questions 67, 68, and 69. A firm faces 2 demand functions as follows: . Strong demander: Ps = 8


Use the information provided below for Questions 67, 68, and 69. A firm faces 2 demand functions as follows: . Strong demander: Ps = 8 - Qs. . Weak demander: Pw = 6 - Qw. The firm's marginal cost MC = $2. There is no total fixed cost. For simplicity, there are one strong demander and one weak demander in the market. The firm considers using a two-part pricing strategy 67) If the firm assumes that both strong and weak demanders in the market and a product's price (P) equals its marginal cost (MC), what is the firm's total profit? A) $8. B) $16. C) $17. D) $18. E) None of the above.68) If the firm assumes that both strong and weak demanders in the market and a product's price (P) exceeds its marginal cost (MC), what is the price of a product (P*)? A) P* = $2. B) P* = $3. C) P* = $4. D) P* = $5. E) None of the above. 69) If the firm assumes that both strong and weak demanders in the market and a product's price (P) exceeds its marginal cost (MC), what is the firm's total profit? A) $8. B) $16. C) $17. D) $18. E) None of the above
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
