Suppose the demand functions facing the wireless telephone monopolist in Worked-Out Problem 18.4 are instead QdL =

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Suppose the demand functions facing the wireless telephone monopolist in Worked-Out Problem 18.4 are instead QdL = 40 - 100P for each low-demand consumer and QdH = 120 - 100P for each high-demand consumer, where P is the per-minute price in dollars. The marginal cost is $0.10 per minute. Suppose the monopolist offers only a single two-part tariff. What will be the monopolist's profit from each type of consumer if it charges a per-minute price of $0.10 and a fixed fee that causes both types of consumers to make a purchase? What if it charges a per-minute price of $0.20? If there are 100 high-demand consumers, how many low-demand consumers can there be for the monopolist to find the $0.20 per-minute price more profitable?
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Microeconomics

ISBN: 978-1118572276

5th edition

Authors: David Besanko, Ronald Braeutigam

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