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Ipatiy [6.2K]
3 years ago
5

Suppose the monopolist able to successfully price discriminate between two groups by charging one group $ 75 and charging $35 to

the other group. c. What are the firm's profits if it charges the two prices as mentioned above
Business
1 answer:
Rom4ik [11]3 years ago
5 0

Answer:

The firm's profits if it charges the two prices as mentioned above = $ 1425

Explanation:

P.S - The exact question is -

Proof -

we calculate the profits individually for 2 different prices:

When price = $75:

Quantity sold = 15 units

Total revenue = 15 × 75 = $1125

Total cost = Marginal cost × quantity

                  = 20 x 15 = $ 300

⇒Total cost = $300

So,

Profit = 1125 - 300 = $825

When price = $35 :

Quantity sold = 55 - 15 (quantity purchased at price = $75)

⇒Quantity sold = 40

Total revenue = 40 × 35 = $1400

Total cost = Marginal cost × quantity

                 = 20 x 40 = $ 800

⇒Total cost = $800

So,

Profit = 1400 - 800 = $600

Now,

Total combined profit = 825 + 600 = $1425

∴ we get

The firm's profits if it charges the two prices as mentioned above = $ 1425

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3 years ago
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Suppose the number of firms you compete with has recently increased. You estimated that as a result of the increased competition
marysya [2.9K]

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