05 Jun Question Suppose the demand functions facing the wireless telephone monop
Question
Suppose the demand functions facing the wireless telephone monopolist in Worked-Out Problem 18.4 (page 647) are
QdL=80-50P
for each low-demand consumer and
QdH=2000-50P
for each high-demand consumer, wherePis the per-minute price in dollars. The marginal cost is $0.10 per minute. Suppose the monopolist offers only a single two-part tariff.
Instructions:Round your answers to 2 decimal places as needed.
a. What will be the monopolist’s profit from each type of consumer if it charges a per-minute price of $0.10 and a fixed fee that causes both types of consumers to make a purchase?
Profitlow= $.
Profithigh= $.
b. What if it charges a per-minute price of $0.20?
Profitlow= $.
Profithigh= $.
c. If there are 200 high-demand consumers, how many low-demand consumers can there be for the monopolist to find the $0.20 price more attractive than the $0.10 price?
low-demand consumers.
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