2. Your firm sells a perfume. The daily demands for your perfume are different b

Question

2. Your firm sells a perfume. The daily demands for your perfume are different between men and women, groups that are identifiable to you. Their daily demands are as follows. Men: P=40-5Q Women: P=60-5Q Your marginal cost is constant at $2 per bottle of perfume. (a) Write the marginal revenue for each of the markets. (b) To maximize profit, what price would you charge per bottle for men and women, respectively? Show work. (c) What quantities do you sell to men and women, respectively? (d) A certain activist group opposes your practice of gender-based price-discrimination and is taking you to court. Explain how you would determine the maximum amount you are willing to spend to fight the case, assuming that you will win if you fight (you can continue to charge 2 prices if you win)?

Explanation / Answer

a) MR for men= 40-10Q MR for women= 60-10Q
b) MR=MC for profit maximization men 40-10Q=2 Q=3.8 P=21 women 60-10Q=2 Q= 5.8 P=31
c) for men Q=3.8 women Q=5.8
d)maximum amount used for fighting the case is the profit that you get

Related Questions

Navigate

• Browse (All)
• Browse 2
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.