Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

4. Calculate consumer surplus under uniform pricing and with price discrimina tion. How does price discrimination affect consumer surplus? Problem 3. A coffee shop manager

image text in transcribed
image text in transcribed
4. Calculate consumer surplus under uniform pricing and with price discrimina tion. How does price discrimination affect consumer surplus? Problem 3. A coffee shop manager realizes that demand for coffee is more elastic among students, and is trying to determine the optimal pricing schedule. Specically, she estimates the following average demands: 0 Student: (13 = 36 10p; 0 Nonstudent: qN = 20 4p. The two groups visit the coffee shop in equal numbers on average. Assume that the marginal cost for coffee is $4 and there is no xed cost. 1. If the coffee shop cannot distinguish whether customers are students or not, what is the optimal uniform price pH? 2. Assume that students can buy a cup of coffee with a discounted price p3 by showing their student ID card and non-students can buy it with a normal price pN. What price should be set for each group? 3. How has price discrimination affected the coffee shop's prot

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Elements of Electromagnetics

Authors: Matthew

3rd Edition

019513477X, 978-0195134773

Students also viewed these Economics questions

Question

What are some of the benefits of being a critical thinker? (p. 231)

Answered: 1 week ago