You are the manager of a monopoly. Your analytics department estimates that a typical consumer's inverse demand function for your firm's product is P = 350-200, and your cost function is C(Q) = 70Q. a. Determine the optimal two -part pricing strategy. Per-unit fee: $ Fixed fee: $b. How much additional profit do you earn using a two-part pricing strategy compared with charging this consumer a per-unit price? $

You are the manager of a monopoly. Your analytics department estimates that a typical consumer's inverse demand function for your firm's product is P = 350-200, and your cost function is C(Q) = 70Q. a. Determine the optimal two -part pricing strategy. Per-unit fee: $ Fixed fee: $b. How much additional profit do you earn using a two-part pricing strategy compared with charging this consumer a per-unit price? $

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter14: Indirect Price Discrimination

Section: Chapter Questions

Problem 14.2IP

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