EC202 ONLINE ACTIVITY 4

Student Name: Tokinteiti Tabore

Student ID: S11196634

QUESTION 1:

Q = 40 – P

TC = 30 + Q2

PART A: Total Profit and Producer Surplus with “No Price Discrimination”

Q = 40 – P TC = 30 + Q2 MR = MC
P = 40 – Q 𝑑𝑇𝐶 40 – 2Q = 2Q
MR = 40 + 2(-Q) 𝑀𝐶 = = (1)301−1 + 2(1)𝑄 2−1 40 = 2Q + 2Q
𝑑𝑄
MR = 40 – 2Q MC = 2Q 40 = 4Q
Q = 10 units

P = 40 – Q
P = 40 – 10
P = $30

𝜋(𝑄) = 𝑇𝑅 − 𝑇𝐶 𝑃𝑆 = 𝑇𝑅 − 𝑇𝑉𝐶
𝜋(𝑄) = ($30 × 10) − (30 + 102 ) 𝑃𝑆 = ($30 × 10) − (10)2
𝜋(𝑄) = $300 − $130 𝑃𝑆 = $300 − $100
𝝅(𝑸) = $𝟏𝟕𝟎 𝑷𝑺 = $𝟐𝟎𝟎

PART B: Total Profit and Producer Surplus with “Perfect First -Degree Price Discrimination”

𝑃 = 𝑀𝐶 𝑃 = 40 − 𝑄
40 − 𝑄 = 2𝑄 𝑃 = 40 − 13.33
40 = 2𝑄 + 𝑄 𝑃 = $26.67
40 = 3Q
Q = 13.33 units

𝜋(𝑄) = 𝑇𝑅 − 𝑇𝐶
1
𝜋(𝑄) = ([ (13.33)(40 − 26.67)] + 26.67(13.33)) − (30 + (13.33)2 )
2
𝜋(𝑄) = (88.84 + 355.51) − 207.69
𝜋(𝑄) = 444.35 − 207.69
𝝅(𝑸) = $𝟐𝟑𝟔. 𝟔𝟔
𝑃𝑆 = 𝑇𝑅 − 𝑇𝑉𝐶
𝑃𝑆 = 444.35 − (13.33)2
𝑃𝑆 = 444.35 − 177.69
𝑷𝑺 = $266.66

THE END ☺