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Assume that you are the new manager of a firm selling a good. Historically, your firm has charged a single price for every unit sold
Assume that you are the new manager of a firm selling a good. Historically, your firm has charged a single price for every unit sold as opposed to price discriminate.Consider a strategy of using two-part tariffs (2nd degree price discrimination) to sell. Say that every consumer had quantity demanded of 10 units at a price of $2.
- If you could charge consumers an access fee for the right to purchase your good, do you have enough information to say what the lowest access fee consumers would be willing to pay?
- What would the demand curve look like to dictate such an access fee?
- In what situation could you charge your customers a higher access fee: when they have elastic demand curves or inelastic demand curves? In one sentence and/or a picture, why?
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