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Imagine cell phones are simple and the only thing consumers care about is minutes. Suppose a monopolist wireless company says, "The cell phone and the first 6 minutes are free, and the price of each additional minute is $2." Now suppose your demand for minutes is q(p) = 10 - p

Suppose the firm's marginal cost is $0 and you are the only consumer. What is the sign-up fee, sign-up quantity (i.e. in the above example it was 6 minutes), and price per additional minute that maximizes its profit? Is this perfect price discrimination? Why or why not?

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M9472561

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