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Subject:
Price Discrimination
Category: Business and Money > Economics Asked by: dime365-ga List Price: $12.00 |
Posted:
17 Oct 2003 18:06 PDT
Expires: 18 Oct 2003 16:55 PDT Question ID: 267350 |
1. ROM is a publishing company which serves subscribers in Toronto and New York. The demand functions in New York - Q= 50-(1/3)P and in Toronto - Q=80-(2/3)P where Q is the subscribers and P is the subscription price per year. The cost providing Q units of service is C=1000+30Q. a) Suppose that the 2 markets are segmented. What are the profit maximizing prices and quantities in the two cities? b) As a result of a new service provided recently by a new company, people in NY can recieve the same subscription fee as people in toronto and vice versa. What will the profit maximizing price and quantity be now? c) compare and explain the differences that arise in the pricing and sales strategies under the two senarios (a) and (b). Compare profits in two situations and explain why they differ. d) based on consumers surplus criterion which situatio is preferred by people in NY and people in toronto? Note: hi, ive been trying this answer for about an hour.. i think its related to 3rd degree price discrimination. Im not sure whether to use inverse demand or the demand function when plugging into the TR-TC. Im assuming for b) quantity will still be the same? im not sure Thanks |
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