Marvel Cleaning Service, Inc. is a firm that specializes in cleaning business offices, and Marvel enjoys a monopoly position because it is the only firm allowed to provide cleaning service at the TechCenter industrial office park - the monopoly is believed to enhance security. There are 25 equal-sized offices in TechCenter, each one leased to a different company. TechCenter is closed 45 days a year (Sundays plus official federal holidays), which limits the demand for Marvel's cleaning services to a maximum of 320 cleanings per year for each one of the 25 companies leasing offices.
Marvel believes it faces an identical demand by each one of the 25 businesses in TechCenter. This demand curve is shown below. Marvel's costs are constant and equal to $30 per office cleaning.
The owner of Marvel Cleaning Service is considering three types of pricing: (1) uniform pricing, (2) first-degree price discrimination, and (3) block pricing with three pricing blocks.
-If Marvel employs block pricing by choosing three pricing blocks -$60, $40, and $20- the total expenditure by each business can be expressed as follows:
‪
Under this three block pricing plan, each of the businesses in TechCenter will buy ______ cleanings per year. The total expenditure by each business is $__________, and Marvel will earn total annual profit of $_____________ (i.e., the sum of the profits from the 25 businesses in TechCenter). Each one of the businesses enjoys $____________ of consumer surplus under this block-pricing plan.

Question

Marvel Cleaning Service, Inc. is a firm that specializes in cleaning business offices, and Marvel enjoys a monopoly position because it is the only firm allowed to provide cleaning service at the TechCenter industrial office park - the monopoly is believed to enhance security. There are 25 equal-sized offices in TechCenter, each one leased to a different company. TechCenter is closed 45 days a year (Sundays plus official federal holidays), which limits the demand for Marvel's cleaning services to a maximum of 320 cleanings per year for each one of the 25 companies leasing offices. 
Marvel believes it faces an identical demand by each one of the 25 businesses in TechCenter. This demand curve is shown below. Marvel's costs are constant and equal to $30 per office cleaning.
  The owner of Marvel Cleaning Service is considering three types of pricing: (1) uniform pricing, (2) first-degree price discrimination, and (3) block pricing with three pricing blocks.
-If Marvel employs block pricing by choosing three pricing blocks -$60, $40, and $20- the total expenditure by each business can be expressed as follows:
 ‪  
Under this three block pricing plan, each of the businesses in TechCenter will buy ______ cleanings per year. The total expenditure by each business is $__________, and Marvel will earn total annual profit of $_____________ (i.e., the sum of the profits from the 25 businesses in TechCenter). Each one of the businesses enjoys $____________ of consumer surplus under this block-pricing plan.

Quizplus · Accepted Answer

The Answer of Marvel Cleaning Service, Inc. is a firm that specializes in cleaning business offices, and Marvel enjoys a monopoly position because it is the only firm allowed to provide cleaning service at the TechCenter industrial office park - the monopoly is believed to enhance security. There are 25 equal-sized offices in TechCenter, each one leased to a different company. TechCenter is closed 45 days a year (Sundays plus official federal holidays), which limits the demand for Marvel's cleaning services to a maximum of 320 cleanings per year for each one of the 25 companies leasing offices. 
Marvel believes it faces an identical demand by each one of the 25 businesses in TechCenter. This demand curve is shown below. Marvel's costs are constant and equal to $30 per office cleaning.
  The owner of Marvel Cleaning Service is considering three types of pricing: (1) uniform pricing, (2) first-degree price discrimination, and (3) block pricing with three pricing blocks.
-If Marvel employs block pricing by choosing three pricing blocks -$60, $40, and $20- the total expenditure by each business can be expressed as follows:
 ‪  
Under this three block pricing plan, each of the businesses in TechCenter will buy ______ cleanings per year. The total expenditure by each business is $__________, and Marvel will earn total annual profit of $_____________ (i.e., the sum of the profits from the 25 businesses in TechCenter). Each one of the businesses enjoys $____________ of consumer surplus under this block-pricing plan.