BUSI 620 help Making Decisions/uophelp.com BUSI 620 help Making Decisions/uophelp.com | Page 29

(product B) that the firm receives are $ 1 each per unit of the products,
draw a figure showing the maximum total profi t (p) that the firm can
earn at each level of TC and the overall maximum profit that the firm
can earn for the three different levels of TC.
Problem 12:
a) Will a monopolist’s total revenue be larger with second-degree price
discrimination when the batches on which it charges a uniform price are
larger or smaller? Why?
b) How does a two-part tariff differ from bundling?
Spreadsheet Problem 1: Using a spreadsheet like the following, entering
formulas for the total revenue and consumers surplus, and given the
following demand curve of a consumer for a monopolist product Q=14-
2p
a) Find the total revenue of the monopolist when it sells 6 units of the
commodity without practicing any form of discrimination. What is the
value of the consumer’s surplus?
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