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    Pricing Strategies 1: Question 1

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    Michael Ezeanaka.O.
    The document discusses three questions regarding pricing strategies: 1. A monopolist serves two markets with demand functions Q1=P1^2 and Q2=P2^3. It has a constant marginal cost of 1. The monopolist will supply each market at the profit-maximizing quantity and charge the profit-maximizing price in each market. 2. A computer shop serves nerds and normal users with different willingness to pay. With given wholesale costs, the shop should set uniform prices that balance the demands of both groups to maximize profits. If software wholesale costs increase, the optimal pricing strategy may change. 3. A monopolist electricity supplier provides power in two periods with different demand functions.

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    Pricing Strategies 1: Question 1

    Uploaded by

    Michael Ezeanaka.O.
    15 views1 page
    The document discusses three questions regarding pricing strategies: 1. A monopolist serves two markets with demand functions Q1=P1^2 and Q2=P2^3. It has a constant marginal cost of 1. The monopolist will supply each market at the profit-maximizing quantity and charge the profit-maximizing price in each market. 2. A computer shop serves nerds and normal users with different willingness to pay. With given wholesale costs, the shop should set uniform prices that balance the demands of both groups to maximize profits. If software wholesale costs increase, the optimal pricing strategy may change. 3. A monopolist electricity supplier provides power in two periods with different demand functions.

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    economics

    Original Title

    Pricing Strategies

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    The document discusses three questions regarding pricing strategies: 1. A monopolist serves two markets with demand functions Q1=P1^2 and Q2=P2^3. It has a constant marginal cost of 1. The monopolist will supply each market at the profit-maximizing quantity and charge the profit-maximizing price in each market. 2. A computer shop serves nerds and normal users with different willingness to pay. With given wholesale costs, the shop should set uniform prices that balance the demands of both groups to maximize profits. If software wholesale costs increase, the optimal pricing strategy may change. 3. A monopolist electricity supplier provides power in two periods with different demand functions.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pdf or txt
    15 views1 page

    Pricing Strategies 1: Question 1

    Uploaded by

    Michael Ezeanaka.O.
    The document discusses three questions regarding pricing strategies: 1. A monopolist serves two markets with demand functions Q1=P1^2 and Q2=P2^3. It has a constant marginal cost of 1. The monopolist will supply each market at the profit-maximizing quantity and charge the profit-maximizing price in each market. 2. A computer shop serves nerds and normal users with different willingness to pay. With given wholesale costs, the shop should set uniform prices that balance the demands of both groups to maximize profits. If software wholesale costs increase, the optimal pricing strategy may change. 3. A monopolist electricity supplier provides power in two periods with different demand functions.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
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    Download as pdf or txt
    of 1

    Pricing

    Strategies 1
    Question 1

    Consider a monopolist that is serving 2 markets with the demand functions


    ! = ! !! and ! = ! !! . The monopolist has constant marginal cost of 1.
    a. How much is he going to supply to each market?
    b. Which price is he charging in either market?

    Question 2

    A computer shop is considering its pricing options. They serve two types of
    customers, nerds and normal users, who have the following willingness to pay
    for software and computers.

    Product

    Nerds

    Normal users

    Software

    100

    500

    Computer

    1000

    600


    50% of all customers are nerds and 50% are normal users. The shop cannot
    discriminate prices between customers.

    a. Suppose wholesale costs for software are 50 and for computers 400.
    How would you recommend that the prices and sells computers and
    software.
    b. Suppose the wholesale costs for software are 200. Would your answer
    change?

    Question 3

    A monopolistic electricity supplier is providing electricity in two periods.


    Demand in period 1 is = 100 5. Demand in period 2 is = 200 5. The
    constant marginal production cost is 2.
    a. What is the optimal way for the supplier to price in the two periods.
    b. Suppose the government requires that the supplier charges the same
    price in both periods. What would she charge?

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