Two Consumers,1 and 2,of the Same Product Have the Following

question 18

Essay

Two consumers,1 and 2,of the same product have the following demand curves:
Q₁ = 500 - 10P and Q₂ = 500 - 20P.MC for the firm is $10.Calculate the prices when the firm discriminates between the two consumers.Is this a good strategy,or should the firm charge the same price to both of them?

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Definitions:

Interest Rates

The price paid for borrowing money, usually expressed as a percentage rate over a period of one year.

Balance Of Trade

The difference between imports from and exports to another country. If imports are larger a trade deficit exists. If exports are larger there is a trade surplus.

Investing Activities

Transactions and events related to the acquisition and disposal of long-term assets and investments, reported in the cash flow statement.

Hedging

A maneuver or contract that eliminates risk from a transaction. In international trade, eliminating exchange rate risk by purchasing a forward contract for delivery of foreign exchange at a specified rate at a specified time.