Assignment 1: Problem set (ECO-550)

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Problem3PriceDiscrimination.xlsx
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Sheet1

First We Flip Our Table Over to Show What Happens As price Fall from High to Low
Demand Curves of Different Slopes I.E. As We Move Down the Demand Curve
50 225 600 Price Q1 Q2 Combined Market
60 210 540 140 90 60 150
70 195 480 130 105 120 225
80 180 420 120 120 180 300
90 165 360 110 135 240 375
100 150 300 100 150 300 450
110 135 240 90 165 360 525
120 120 180 80 180 420 600
130 105 120 70 195 480 675
140 90 60 60 210 540 750
50 225 600 825
slope -1.5 -6
Demand Curve 1 Demand Curve 2 Combined Market
Price Q1 TR MR MC TC MR-MC Profit Price Q2 TR MR MC TC MR-MC Profit Price Combined Q TR MR MC TC MR-MC Profit
140 90 12600 10 900 11700 140 60 8400 10 600 7800 140 150 21000 10 1500 19500
130 105 13650 70 10 1050 60 12600 130 120 15600 120 10 1200 110 14400 130 225 29250 110 10 2250 100 27000
120 120 14400 50 10 1200 40 13200 120 180 21600 100 10 1800 90 19800 120 300 36000 90 10 3000 80 33000
110 135 14850 30 10 1350 20 13500 110 240 26400 80 10 2400 70 24000 110 375 41250 70 10 3750 60 37500
100 150 15000 10 10 1500 0 13500 100 300 30000 60 10 3000 50 27000 100 450 45000 50 10 4500 40 40500
90 165 14850 -10 10 1650 -20 13200 90 360 32400 40 10 3600 30 28800 90 525 47250 30 10 5250 20 42000
80 180 14400 -30 10 1800 -40 12600 80 420 33600 20 10 4200 10 29400 80 600 48000 10 10 6000 0 42000
70 195 13650 -50 10 1950 -60 11700 70 480 33600 0 10 4800 -10 28800 70 675 47250 -10 10 6750 -20 40500
60 210 12600 -70 10 2100 -80 10500 60 540 32400 -20 10 5400 -30 27000 60 750 45000 -30 10 7500 -40 37500
50 225 11250 -90 10 2250 -100 9000 50 600 30000 -40 10 6000 -50 24000 50 825 41250 -50 10 8250 -60 33000
Highes Profit is $13,500 where optimal price is between $100 and $110. Highest Profit is at $29,400 optimal price of $80 Highest Profit is as $42,000 with optimal price of between $80 and $90
Selling separate total profits are $42,900 which is a gain of $900 over treating as one market