A nightclub manager realizes that demand for drinks is more elastic among students, and is trying to determine the optimal pricing schedule. Specifically, he estimates the following average demands:

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Nelly StrackeLv2

13 Aug 2019

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You have estimated that all consumers who buy from your firm have identical demands for your product. Each customer's demand is given by Q = 20 - (P/2), and your total cost of production is TC = 45 + 20 Q. You want to devise a two-part pricing strategy (T ; P), where T represents the fixed fee and P the price per unit. Given this information, the optimal two-part pricing is what?

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