i) You are selling thirty mobile phones at the price of £70 in present month. You are evaluating that if you lower the price by £5 to £65, you will sell 40 mobile phones. You assume that you face linear demand curve. Determine profit maximizing price and quantity which you set?
ii) Every consumers have identical demand for the product. Each person's demand curve is given as P = 30 - Q where P is price and Q quantity demanded. Marginal cost of production is £2. Determine profit-maximising two-part tariff? Describe.
iii) You expect to sell 75000 units of the product and the total costs are provided by TC(q) = 10q + 100 000, where q is output. Using cost-plus pricing with the 20% target rate of return, at what price are you going to sell your product? Describe.