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The Mall Street Journal




25.6 The Mall Street Journal is considering oering a new service;which will send news articles to readers by email. Their market research;indicates that there are two types of potential users, impecunious undergraduates;studying microeconomics and high-level executives. Let x be;the number of articles that a user requests per year. The executives have;an inverse demand function PE(x) = 100? x and the undergraduates;have an inverse demand function PU(x) = 80? x. (Prices are measured in cents.) The Journal has a zero marginal cost of sending articles via;email. Suppose that the Journal can identify which of the users are undergraduates;and which are executives. It decides to a plan where users;can buy a fixed number of articles per year for a fixed price per year.;If it wants to maximize total prots it will buy 100 articles to the executives and 80 articles per year to the students.;question;It will charge how much per year to the executives and how much per year to the students.


Paper#28777 | Written in 18-Jul-2015

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