1. SHORT QUESTIONS1.1. Optimal pricing. There two consumers, Alice and Bob, and two kinds ofproducts A and B. Alice and Bob have valuations according to the tableABAlice 30 4230 42Bob 50 66You sell the products and it costs you nothing to produce them. You know this table,but when Alice or Bob walk into your store, you cannot tell who they are. That is,if Alice walks in, you do not know if perhaps it is Bob instead who walked in, andvice-versa. What is the optimal pricing plan for the two products?1.2. Optimal pricing and packaging. You produce Prosecco, at constant mar-ginal cost 5, and need to decide the size and prices of your bottles. You have twotypes of customers: one type has Prosecco in their spritzs with Sunday morningbrunch, and the other is Ducati who wins a motorcycle race every Sunday and celebrates. Upon buying quantity q and paying 7, these two types get utility 10√ч-and 30√√. What is your optimal plan?

From the table, we can see that Alice is willing to pay up to $30 for product A and $42 for product…

Answered: 1. SHORT QUESTIONS 1.1. Optimal…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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