Bobbie\'s Hair Care is a natural monopoly in a small isolated town. The table be
ID: 1251952 • Letter: B
Question
Bobbie's Hair Care is a natural monopoly in a small isolated town. The table below shows Bobbie's demand schedule and total costs. Bobbie has done a survey and discovered that she gets four types of consumers: one woman who is willing to pay $18, one senior citizen who is willing to pay $16 , one student who is willing to pay $14 and one boy who is willing to pay $12.
Price
(dollars per haircut)
Quantity
(haircuts per hour)
Total Cost
(dollars per hour)
20
0
20
18
1
21
16
2
24
14
3
30
12
4
40
10
5
54
If Bobbie price discriminates among the four types of consumer:
a. What is the price that she charges to each type of consumer? Woman_____ Senior____ citizen_____ student____ Boy____
b. How many haircuts an hour does Bobbie sell? _____
c. What is Bobbie's economic profit?_____
d. Is the quantity of haircuts efficient? Explain.
Price
(dollars per haircut)
Quantity
(haircuts per hour)
Total Cost
(dollars per hour)
20
0
20
18
1
21
16
2
24
14
3
30
12
4
40
10
5
54
Explanation / Answer
a)18, 16, 14, 12 b) 4 c) (18+16+14+12)-40= 20 d) No, an efficient amount would be where economic profit was 0.