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Suppose the demand functions facing a wireless telephone monopolist are QE = 80 - 200P for each low-demand consumer and Q# = 120 - 200P
Suppose the demand functions facing a wireless telephone monopolist are QE = 80 - 200P for each low-demand consumer and Q# = 120 - 200P for each high-demand consumer, where is the per-minute price In dollars. The marginal cost is $0.02 per minute. Suppose the monopolist offers a menu of two-part tariff plans, with one plan Intended for each type of consumer. Suppose too that for any per- minute price P, In the low-demand plan, the fixed fee In the low-demand plan leaves a low-demand consumer with zero surplus; that the number of minutes In the low-demand plan is capped at the number of minutes desired by a low-demand consumer at that plan's per-minute price; and that the high-demand plan has a per-minute price of $0.02 per minute and a fixed fee that leaves the high- demand consumer approximately Indifferent between the low- and high-demand plans. Suppose that there are 100 high-demand consumers and 300 low-demand consumers. Will the monopolist's profit be higher when the per-minute price In the low-demand plan Is $0.07 or $0.12? Instructions: Round your answers to 2 decimal places as needed. a. Suppose the monopolist's per-minute price In the low-demand plan Is $0.07. Profit = $ 7225 b. Now suppose the monopolist's per-minute price In the low-demand plan Is $0.12. Profit = $ |7525
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