Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question 3: Non-linear pricing (Type 2 PD) Hint: to do this vou will need to go through the rigorous calculus based approach in some detail

image text in transcribed
Question 3: Non-linear pricing (Type 2 PD) Hint: to do this vou will need to go through the rigorous calculus based approach in some detail - that is, slides 41-47 of Lecture 2 (Saravia Lecture 1.29.24.pdf), which we also reviewed on 2.5.24. Let there be two types of consumer. Type A has utility given by 12q p. Tvpe B has utility given by 54p, where g is a numerical index of quality and # is the price of a unit. There are three times as many Tvpe B's as there are Type A's. The total number of consumers is 400. The marginal cost of serving each individual consumer's purchase is 4. This means the total variable cost of serving a consumer is equal to 242. The firm must also incur a fixed cost of production equal to F. Given that the firm cannot distinguish a Tvpe A from a Type B, would the firm want to operate if F = 1000

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

Entrepreneurship

Authors: Andrew Zacharakis, William D Bygrave

5th Edition

9781119563099

Students also viewed these Economics questions