ECON 3411 Study Guide - Peanut Oil, Fixed Cost, Oligopoly
Document Summary
You could instead calculate the area of the triangle under demand and above the mc/ac curve to get 5(0. 5(18-8)) = . In addition, we must be able to prevent resale between the groups: charge a per-unit fee equal of , which equals marginal cost. At this price, you will sell 6 units. The fixed fee then should be (250 10)(6)(0. 5) = : the optimal per-unit price is determined where mr = mc, or 250 - 80q = 10. Solving yields q = 3 units and p = . The profits at this output and price are ( - )(3) = . Thus, you earn more by two-part pricing. Chapter 11 - pricing strategies for firms with market power: the inverse demand function is p = 160 2q. The optimal number of units in a package is that output where price equals marginal cost.
