Question
You are running your own business, and you estimate that each individual customer has the following demand curve: P = 50 - 5Q Your costs
- You are running your own business, and you estimate that each individual customer has the following demand curve: P = 50 - 5Q Your costs are constant at $10 per unit. Given the above information, answer each question for each pricing strategy:
- A. Assume you charge the same price to each customer. What is your profit-maximizing price? What is the quantity each customer will purchase? What is your profit per customer?
- B. Assume you use 2-part pricing for each customer. What is your profit maximizing price? What is the quantity each customer will purchase?
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Answer A The profitmaximizing price is 30 per unit At this price each customer will purchase 8 units ...Get Instant Access to Expert-Tailored Solutions
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Get StartedRecommended Textbook for
Managerial Economics
Authors: Paul Keat, Philip K Young, Steve Erfle
7th edition
0133020266, 978-0133020267
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