In Questions a firm sells its product to two groups of buyers: daytime buyers and nighttime buyers. There are 50 daytime buyers, all of whom have identical demands given by D_D in the figure below. There are 50 nighttime buyers, all of whom have identical demands given by D_N in the figure below. The firm's variable costs are constant (SMC = AVC = $12) and its total fixed cost is $250,000. The marketing director must devise a two-part pricing plan that will maximize the firm's profit.
-Now suppose the marketing director wishes to serve both daytime and nighttime buyers, what is the MR_f function?

Question

In Questions a firm sells its product to two groups of buyers: daytime buyers and nighttime buyers. There are 50 daytime buyers, all of whom have identical demands given by D_D in the figure below. There are 50 nighttime buyers, all of whom have identical demands given by D_N in the figure below. The firm's variable costs are constant (SMC = AVC = $12) and its total fixed cost is $250,000. The marketing director must devise a two-part pricing plan that will maximize the firm's profit.

-Now suppose the marketing director wishes to serve both daytime and nighttime buyers, what is the MR_f function?

Quizplus · Accepted Answer

MRf = 5,000 - 200f because the marketing director wishes to serve both daytime and nighttime buyers, so the MRf function is the sum of the MRf functions for daytime and nighttime buyers. The MRf function for daytime buyers is MRf = 2,500 - 100f, and the MRf function for nighttime buyers is MRf = 2,500 - 100f. Therefore, the MRf function for both daytime and nighttime buyers is MRf = 5,000 - 200f.

In Questions a Firm Sells Its Product to Two