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Managerial Economics 2nd Edition by William Boyes
Edition 2ISBN: 978-0618988624Managerial Economics 2nd Edition by William Boyes
Edition 2ISBN: 978-0618988624 Exercise 1
Stargazer Recordings sells compact discs in two markets. The marginal cost of each disc is $2. Demand in each market is given by Q 1 = 40 - 10 P 1 and Q 2 = 40 - 2 P 2 where Q is thousands of compact discs.
a. If the firm uses price discrimination, how much output should it produce and what price should it charge? What is its profit? What type of price discrimination is it using?
b. If the firm cannot prevent resale of compact discs, what will its profit be?
a. If the firm uses price discrimination, how much output should it produce and what price should it charge? What is its profit? What type of price discrimination is it using?
b. If the firm cannot prevent resale of compact discs, what will its profit be?
Explanation
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Verified
Profit maximization:
The main goal of t...
Managerial Economics 2nd Edition by William Boyes
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