b) What would be the total revenue of the monopolist if it practiced first-degree price discrimination? How much would the consumers’ surplus be in this case?
c) What if the monopolist charged P =$ 5.50 for the first 3 units of the commodity and P =$ 4 for the next 3 units – what type of price discrimination is this?
Froeb et al.’ s Chapter 14: a) Individual problems: 14 – 1 and 14 – 4.
Individual Problem 14-1: Why might Mattel set a much lower contribution margin on its Barbie dolls than on the accessories for the dolls?
Individual Problem 14-4: A manufacturer of microwaves has discovered that male shoppers have little value for microwaves and attribute almost no extra value to an auto-defrost feature. Female shoppers generally value microwaves more than men and attribute value to the auto-defroster feature. There is little additional cost to incorporating auto defrost feature. Since men and women cannot be charged different prices for the same product the manufacturer is considering introducing two different models. The manufacturer has determined that men value a simple microwave at $ 70 and one with auto defrost at $ 80 while women value a simple microwave at $ 80 and one with auto defrost at $ 150. If there is an equal number of men and women, what pricing strategy will yield the greatest revenue? What if women compromise the bulk of microwave shoppers?
Salvatore’ s Chapter 13: a) Discussion Questions: 8 and 10. b) Problems: 12, 13, and 15.
Discussion 8: What is the basic difference between using a subsidy to induce producers to install antipollution equipment and a tax on producers who pollute?