Suppose you are a pricing analyst for a big software company. You have two types of clients who use your product. Type
Posted: Thu May 19, 2022 9:26 am
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?
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?