You are a an economic consultant contracting with a firm to price one of their new...
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You are a an economic consultant contracting with a firm to price one of their new software programs for data analysis. The market demand for the software program can be rewritten as P-70-1.667Q, where P is the price and Q is the average quantity purchased by each customer. Marginal revenue for the market is therefore estimated by the equation MR-70-3.333Q. You determine there are two types of customers for this firm's software, Type A and Type B. Demand for Type A customers can be estimated by the equation P= 120-10QA, where P is the price and Qus the quantity purchased by each Type A customer. The demand for Type B customers can be estimated by the equation P-60-2Q". The marginal revenue for Type A and Type B customers is MRA= 120-20Q and MRB = 60-4Q, respectively. a. If you are unable to segment your market and the marginal cost is a constant $20, what is your market price? b. How many units does the average customer purchase? c. How much producer surplus does the supplier earn from each customer? d. Now, suppose you can segment your market into Type A and Type B customers. what price will you charge Type A customers? e. How many units do Type A customers purchase? f. What price will you charge Type B customers? g. How many units will Type B customers purchase? h. What is the total producer surplus earned from both Type A and Type B customers? You are a an economic consultant contracting with a firm to price one of their new software programs for data analysis. The market demand for the software program can be rewritten as P-70-1.667Q, where P is the price and Q is the average quantity purchased by each customer. Marginal revenue for the market is therefore estimated by the equation MR-70-3.333Q. You determine there are two types of customers for this firm's software, Type A and Type B. Demand for Type A customers can be estimated by the equation P= 120-10QA, where P is the price and Qus the quantity purchased by each Type A customer. The demand for Type B customers can be estimated by the equation P-60-2Q". The marginal revenue for Type A and Type B customers is MRA= 120-20Q and MRB = 60-4Q, respectively. a. If you are unable to segment your market and the marginal cost is a constant $20, what is your market price? b. How many units does the average customer purchase? c. How much producer surplus does the supplier earn from each customer? d. Now, suppose you can segment your market into Type A and Type B customers. what price will you charge Type A customers? e. How many units do Type A customers purchase? f. What price will you charge Type B customers? g. How many units will Type B customers purchase? h. What is the total producer surplus earned from both Type A and Type B customers?
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