Suppose you are a pricing analyst for a big software company.
You
have two types of clients who use your product. Type A’s
inverse
demand is P = 100 – 6Q, where Q is users and P is in dollars.
Type
B’s inverse demand is P = 86 – 3.5Q. Assume the
constant
marginal cost of supplying software is 16 or MC = 16.
A. What price do you charge each type?
B. What is total producer surplus?
C. If the firm charges $58 per user for a package where the
buyer can purchase any quantity she wishes and a price of $51 for
any buyer willing to purchase 10 or more units, will this pricing
strategy be incentive compatible?
Suppose you are a pricing analyst for a big software company. You have two types of clients who use your product. Type
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