Question
Assume that a firm has two types of consumers: students and young professionals. The demand from students is Q S = 180 - 2 p,
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Assume that a firm has two types of consumers: students and young professionals. The demand from students is QS= 180 - 2p, and the demand from young professionals is QYP= 300 - 2p. The marginal cost of producing this product is $20.
- Suppose that the firms use the services of ID.me (a company that verifies whether the customer is a student or not) to identify their customers so that they can charge different prices for students and professionals. If the firms are maximizing their profits, what price should they charge to students? What price should they charge to professionals?
- Suppose that the firm decides not to use the services of ID.me and they are not able to differentiate their customers. What is the optimal price for this firm if they are not able to engage in price discrimination?
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Financial management theory and practice
Authors: Eugene F. Brigham and Michael C. Ehrhardt
13th edition
1439078106, 111197375X, 9781439078105, 9781111973759, 978-1439078099
