Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Suppose the demand functions facing the wireless telephone monopolist in Worked-Out Problem 18.4 (page 647) are QdL=50100P for each low-demand consumer and QdH=120100P for each

Suppose the demand functions facing the wireless telephone monopolist in Worked-Out Problem 18.4 (page 647) are QdL=50100P for each low-demand consumer and QdH=120100P for each high-demand consumer, where P is the per-minute price in dollars. The marginal cost is $0.20 per minute. Suppose the monopolist offers only a single two-part tariff. Instructions: Round your answers to 2 decimal places as needed. a. What will be the monopolist's profit from each type of consumer if it charges a per-minute price of $0.20 and a fixed fee that causes both types of consumers to make a purchase? Profitlow = $ . Profithigh= $ . b. What if it charges a per-minute price of $0.30? Profitlow = $ . Profithigh= $ . c. If there are 500 high-demand consumers, how many low-demand consumers can there be for the monopolist to find the $0.30 price more attractive than the $0.20 price? low-demand consumers.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored 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

Principles Of Microeconomics

Authors: N Gregory Mankiw

7th Edition

1305081676, 9781305081673

More Books

Students also viewed these Economics questions

Question

What are the short- and long-term effects of stress on the body?

Answered: 1 week ago

Question

The quality of the proposed ideas

Answered: 1 week ago

Question

The number of new ideas that emerge

Answered: 1 week ago