Purchase Solution

first degree price discrimination

Not what you're looking for?

Ask Custom Question

Two consumers, Consumer 1 and Consumer 2, purchase the same product.
They have the following demand curves:

Q1 = 500 - 10 P and
Q2 = 500 - 20 P.

MC for the firm is $10.

(a) Calculate the prices that should be charged to each
customer if the seller is able to use first degree price discrimination.
(b) Is this a good strategy, or should the firm charge the same price to both customers?

Purchase this Solution

Solution Summary

This post examines first degree price discrimination.

Solution Preview

Two consumers, Consumer 1 and Consumer 2, purchase the same product.
They have the following demand curves:

Q1 = 500 - 10 P and
Q2 = 500 - 20 P.

MC for the firm is $10.

(a) Calculate the prices ...

Solution provided by:
Education
  • BE, Bangalore University, India
  • MS, University of Wisconsin-Madison
Recent Feedback
  • "Your explanation to the answers were very helpful."
  • "What does 1 and 0 means in the repair column?"
  • "Went through all of the formulas, excellent work! This really helped me!"
  • "try others as well please"
  • "Thank you, this helped a lot. I was not sure how to plug in those numbers to a formula. This was a great help. Now I have to figure out how to explain cost of capital is used in net present value analysis, and how cost of capital is used in net present value analysis. This stuff gets confusing."
Purchase this Solution


Free BrainMass Quizzes
Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.