You have estimated the typical consumer's monthly demand function for a certain product to be Q =
Question:
You have estimated the typical consumer's monthly demand function for a certain product to be Q = 120-5P. The marginal cost is constant and is equal to $6.Assume that fixed cost is 0.
1) if the music academy charges the same price for every lesson, calculate the maximum profit they can obtain.
2) Find CS, PS, and DWL if the firm successfully implements first degree price discrimination?
3) Explain how to implement block pricing in this business. Calculate the profit generated by the typical customer of the academy?
4) Suppose instead that you decide to offer a certain number of units at a price of $16. After reaching the threshold, each additional unit is sold at half the price. How many units will the firm sell at the original price in order to offer this 50% Overall, what is the profit for the firm after transacting with a typical customer?
Financial Algebra advanced algebra with financial applications
ISBN: 978-0538449670
1st edition
Authors: Robert K. Gerver