Question

1. An online retail store has both students and adult customers. Suppose that the demand for e-books by a typical adult is 24 = 30-3P. The demand for a typical student is 9. - 15 -2P. There are equal numbers of students and adults. The marginal cost of each e-book is $1. a. What price will the retail store choose if it cannot discriminate between the two groups? What will total profit be at this price? How much will each group buy? b. If the online store could separate the groups and practice third-degree price discrimination what price per e-book would be charged to members of each group? What would profits be? c. One of the economists working at this online store comes up with the idea of offering a membership charge to each group; this membership will allow for easy access to books. All members will have access to books for a small price per book (in addition to the membership fee). What will the membership charge for students be? What will be the membership charge for adults? What is the store's profit under this regime? How many books will each group buy? At what price?

Only Q3 Thank you

Answer 1

Op 30-3P Because Denad e tor Adulti he dlemnd We hane 2eptns c15-2P, Jhudent ie wilt te Dermand atnderts is os 10 M.5 Charge Mambeahip Fee eperal t eaeh conumer Group Comunn Suplus CCs) and Pmce CP-Mc) MC 1 DA CS 4- o-P'O4 = (10-1 (30-3) At P- MC Of-30-3P - 30-32 27 = 950 75-1213 ar1-2 13 6-513 4225 2 Prepit CSAt Css+(P-MCen+a,) BLo P-MC 121-5t42 Ophon 2 9 AMembership ee CSA Beeanae ble cmnt affed igh mtershtda ase Pait CSAt(P-Me) "as o creMe) こ121-5

pliem 3 Chny a pmee p' Membuahip te Pret 2Css +( P-me)' C+,) At Prce P tMc &15-2P On t0s0 B0-3r) +fis-) 30-3P 2 (de-51(-)T- 7-5-P)2 rrne 2*( 7-5- P)+ (-1)" (45-Gp) 2'2(7.5--1 + (r-) (-s)+(4S-spio f -30 t4P 5P+5 +45-5P-0 6p420 o fe 2016 Pa 3. 3. Ci, 7.5-3.23) 7.3221 O4 as4s-SP= 45-53-31 = 28-35 217.3 229 + (3.33-1 TT 22-3s 34.77 78 +66 .055 Iu0. 3233 MaNinum peri in abtanmd unda Optm 1 Thus he Finn chnge Drent membeship tee eual to Conumn ampls and price eqm to mapinal Ceat MC) t each

RAe Adult Student Maberdap chag e CSs 2 CSA = 1 21, 5 3 U2.2S fnie per 41 PeMc inpet IT C tCSA 21.St 4 2.2r T63. 75 13 19-2 P OA-30-3 P - 27