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= 450 -40Q, and your cost function is C(Q) = 290Q. a. Determine the optimal two-part pricing strategy. Per-unit fee: $ Fixed fee: $ 8 ☑ 320 b. How much additional profit do you earn using a two-part pricing strategy compared with charging this consumer a per-unit price? 450 $
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= 450 -40Q, and your cost function is C(Q) = 290Q. a. Determine the optimal two-part pricing strategy. Per-unit fee: $ Fixed fee: $ 8 ☑ 320 b. How much additional profit do you earn using a two-part pricing strategy compared with charging this consumer a per-unit price? 450 $
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
Related questions
Question
(answer in text form please (without image), Note: .Every entry should have narration please)
![Problem 11-05 (algo)
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= 450 -40 Q, and your cost function is C(Q) = 290Q.
a. Determine the optimal two-part pricing strategy.
Per-unit fee: $
Fixed fee: $ 320
8
b. How much additional profit do you earn using a two-part pricing strategy compared with charging this consumer a per-unit price?
$
450](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9f489546-385d-45e9-9cb7-fadc96b19759%2Feb560d0f-c7f8-4780-af11-d509238d8516%2Fcq04rm_processed.png&w=3840&q=75)
Transcribed Image Text:Problem 11-05 (algo)
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= 450 -40 Q, and your cost function is C(Q) = 290Q.
a. Determine the optimal two-part pricing strategy.
Per-unit fee: $
Fixed fee: $ 320
8
b. How much additional profit do you earn using a two-part pricing strategy compared with charging this consumer a per-unit price?
$
450
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 24 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
![Managerial Economics: A Problem Solving Approach](https://www.bartleby.com/isbn_cover_images/9781337106665/9781337106665_smallCoverImage.gif)
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
![Managerial Economics: A Problem Solving Approach](https://www.bartleby.com/isbn_cover_images/9781337106665/9781337106665_smallCoverImage.gif)
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning