Question
Please can you help me with this problem? Suppose that there is a monopolist with two units of a durable good. There are only two
Please can you help me with this problem?
Suppose that there is a monopolist with two units of a durable good. There are only two consumers, where one consumer has a willingness to pay of 35 and the other has that of 20. The market for the durable good only lasts two periods. In each period the monopolist sets a price and the consumers decide whether to purchase or not. Suppose that both consumers have the same discount factor and the monopolist has a discount factor .
Q5. Under what condition on and does the consumer with the higher willingness to pay only buy the good in period 1 at the monopolist's profit-maximizing prices?
(a) (2+)/3 (b) (1+2)/3
(c) (1+)/2 (d) (1+)/2
(e) (1+3)/4
Q6. When = 0.8 and = 0.95, what is the profit-maximizing price in
period 1 for the monopolist?
(a) 23 (b) 22 (c) 18 (d) 20 (e) 35
Q7. When = 0.95 and = 0.8, what is the profit-maximizing price in period 1 for the monopolist?
(a) 23(b) 22 (c) 18 (d) 20 (e) 35
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