3. PRICING WITH MARKET POWER (20 POINTS) a. A company faces two markets (Market A and Market B) with different character

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3 Pricing With Market Power 20 Points A A Company Faces Two Markets Market A And Market B With Different Character 1 (57.58 KiB) Viewed 10 times

3. PRICING WITH MARKET POWER (20 POINTS) a. A company faces two markets (Market A and Market B) with different characteristics so that the company applies third-degree price discrimination. The company's analysis results find that the elasticity of demand for market A is -5, while market B is -2. If the company applies a price of Rp.5,000 per unit for Market A, what price should be applied for market B, so that the company's profit is maximum? (10 points) b. A diving equipment rental company at a diving site faces a variety of demands. During the holiday season (January, June, and December), the demand is very high with the inverse demand curve P= 196 -0.5Q, where P = rental value per unit, and Q = the number of equipment rented per month. Meanwhile, for non-holiday morkhs, the demand decreases slightly with the estimated demand function as follows: P=116-0.5Q It is also known that the total cost per month is the same during high-season and low- season, that is TC= 200-4Q+0.5Q². i. What is the profit maximizing price and quantity during high-season and low- season? (5 points) ii. How much profit does the company make in a year? (5 points)