Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

3. (25 points) The Celestial Communications is the only cellular phone provider in the city and sells its service to corporate users and regular users.

image text in transcribed
3. (25 points) The Celestial Communications is the only cellular phone provider in the city and sells its service to corporate users and regular users. The two groups have different demands for cellular phone service and their demands are given by Corporate users: P- = 10 - Qc Regular users: PR = 20 - 2QR The total cost function of the monopolist is given by: C(Q) = 100 + 4Q a. (3 points) What quantity should the monopolist sell to the corporate users and at what price? b. (3 points) What quantity should the monopolist sell to the regular users and at what price? c. (4 points) What is the total amount of profit the monopolist will earn from the two markets? d. (5 points) If Celestial Communications charges the same price to both types of users then what is the total profit it can earn? e. (10 points) Now suppose that Celestial Communications is considering charging two-part tariff to each of the markets. What is the profit maximizing fixed fee and per unit price for each type of user? What is the profit for the monopolist in this case

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Economics

Authors: Campbell R. McConnell, Stanley L. Brue, Sean M. Flynn

18th edition

978-0077413798, 0-07-336880-6, 77413792, 978-0-07-33688, 978-0073375694

More Books

Students also viewed these Economics questions

Question

LO14.1 Describe the characteristics of oligopoly.

Answered: 1 week ago