How to do this?

hydromind

Senior Member
Joined
Feb 12, 2005
Messages
1,545
Reaction score
0
A psychiatrist is contemplating to set different prices for two different groups of clients: males (M) and females (F). The marginal cost MC of providing counselling sessions is given by

MC = 5 + 0.002Q,

where Q is quantity of sessions provided. The demand functions of males and females are respectively:
QM = 500 – 25PM,
QF = 900 – 30PF,

where subscript M represents male, subscript F represents female, QM is quantity demanded by males, QF is quantity demanded by females, PM is price charged to males, and PF is price charged to females.

(a) Suppose the male and female markets can be segregated. Compare the steps in solving the two prices PM and PF. Solve PM and PF.

(b) Based on your answers in (a), analyze if PM > PF or PM < PF.

(c) Suppose the psychiatrist cannot price discriminate male and female clients. Only a single price is set. Locate the profit in this situation, and indicate if it is higher or lower than that in (a).
 
Important Forum Advisory Note
This forum is moderated by volunteer moderators who will react only to members' feedback on posts. Moderators are not employees or representatives of HWZ. Forum members and moderators are responsible for their own posts.

Please refer to our Community Guidelines and Standards, Terms of Service and Member T&Cs for more information.
Top