6. Provide the best pricing strategy (individual pricing or bundle pricing) for a firm serving consumers A, B, and C, who is considering whether to bundle or price goods R1 and R2 individually. In answering this question compare profit levels when pricing the goods individually, as a bundle, or as a mixed bundle. Assume the marginal cost of the goods is zero. Consumer Good R1 Good R2 3.25 8.25 6.00 В 3.25 C 10.00 10.00

6. Provide the best pricing strategy (individual pricing or bundle pricing) for a firm serving consumers A, B, and C, who is considering whether to bundle or price goods R1 and R2 individually. In answering this question compare profit levels when pricing the goods individually, as a bundle, or as a mixed bundle. Assume the marginal cost of the goods is zero. Consumer Good R1 Good R2 3.25 8.25 6.00 В 3.25 C 10.00 10.00

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter18: Asymmetric Information

Section: Chapter Questions

Problem 18.3P

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As the new general manager of the Grand Palladium Jamaica luxury all-inclusive resort, youare assessing your pricing policies. Currently, the price of a weekend stay is $2,000 perguest. You estimate the marginal cost of serving a guest at $1,600, and while yourpredecessor unfortunately did not leave you data from the pricing experiments and testmarketing she performed, you do know that such experiments were done, and that yourpredecessor was competent.a. What is your best estimate of the elasticity of demand for a weekend stay at the GrandPalladium?b. Your learned that at the current price, the resort is only 80% full on the weekends.Remembering the sense of belonging that you experienced in a crowded subway duringthe rush hour, you contemplate lowering the price so the resort is completely full. What isyour back-of-the-envelope calculation for how much you need to lower the price?c. After some thought you cooled to the idea of full occupancy. Instead, you focused yourenergy and…
Suppose you are the economic adviser ofa company producing three brands of mobile pnones;Nokia 10, Samsung X and iPhone 7. Suppose further that, your company currently sells 120units of iPhone Z at e800 per unit, 150 units of Samsung X at e800 per unit and 200 units ofNokia 10 at e100 per unit, but in a bid to maximize profit, the company's managing directorproposes an increase in price of Samsung X from e800 to e1000 per unit for which quantitydemanded is anticipated to fall from 150 to 100 units; iPhone Z from e800 to e 1200 per unitfor which quantity demanded is anticipated to fall from 120 to 100 units; and Nokia 10 from100 to 200 per unit for which quantity demanded is expected to fall from 200 to 100 unitsUsing the mid-polint formula. compute the price elasticity of demand for each brand.From your answer in i, what is the type and economic interpretatiom of each brand'sii.value of elasticity.
Suppose Tasty Cakes is deciding its pricing strategy: it is debating whether to offer a single linear price for its sheet cakes or to offer non-linear pricing. Suppose on any day, it gets 2 customers–who are of Type A and TypeB with the following maximum willingness-to-pay for the cakes: Units Type A Type B 1 $100 $90 2 $75 $40 Suppose it costs $10 to bake each of the cakes. (a) If Tasty Cakes decides to pick a linear pricing strategy, what will be the profit-maximizing price it should choose? How many cakes will it end up selling and what will be its total profit? (b) If Tasty Cakes decides to pick a non-linear pricing strategy where it may offer a different price depending on the number of cakes purchased, what should be the profit-maximizing set of prices? How many cakes will it sell and what will be its total profit? (c)Comparing Tasty Cakes’profits in (a) and (b), explain IN WORDS why we see this difference in profits
Price You are the manager of a firm that charges customers $16 per unit for the first unit purchased, and $12 per unit for each additional unit purchased in excess of one unit. The accompanying graph summarizes your relevant demand and costs. 0 18 16 + 12 10 20 14 8 6 4 2 0 1 2 3 4 Quantity MC-AC D 5 6 7 ernal browser=0&launchUrl=https%253A%252F%252Fnewconnect.mheducation.com%252F#/activity/question-grow a. What is the economic term for your firm's pricing strategy? First degree price discrimination O Fourth degree price discrimination O Third degree price discrimination O Second degree price discrimination Seved b. Determine the profits you earn from this strategy.
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b) The manager could have charged Joe a single price per round. How much extra profit does theclub earn by using two-part pricing?c) Joe marries Susan, who is also an enthusiastic golfer. Susan wants to join the Northlands Club.The manager believes that Susan’s inverse demand function is ? = 100 − 2?. The manager has apolicy of offering each member of a married couple the same two-part prices, so he offers themboth a new deal. What two-part pricing deal maximizes the club’s profit?d) Will this new pricing have a higher or lower access fee and per-unit fee than in Joe’s originaldeal? How much more would the club make if it charged Susan and Joe separate prices?
Please give short answers with less explanation but ASAP just answer first question
1. Tying as a Bundling Strategy Ginnie's Gym Refreshment Bar Hydration Power Drink Satisfying Smoothie Early 7.00 5.00 Late 6.00 10.00 Ginnie has observed that her signature item, the Satisfying Smoothie, is very popular with the late evening crowd at the gym, but it is not so popular with the early crowd. The early and late crowds have only slightly different preferences for her Hydration Power Drink. The gym has a very large clientele, and Ginnie can’t always tell who has the late-crowd preference and who has the early-crowd preference. In her graduate MBA class, they have been studying tying as a bundling strategy. Ginnie asked her professor, “Would bundling work for my business?” Her professor said, “I think you told me that the marginal costs for you two products differ significantly, so first, I would recommend that you look at the contribution margin for each. Sometimes, low prices may be more profitable and sometimes high prices…
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You are the manager of a firm that charges customers $16 per unit for the first unit purchased, and $12 per unit for each additional unit purchased in excess of one unit. The accompanying graph summarizes your relevant demand and costs. a. What is the economic term for your firm’s pricing strategy? multiple choice Third degree price discrimination Fourth degree price discrimination First degree price discrimination Second degree price discrimination b. Determine the profits you earn from this strategy. $ c. How much additional profit would you earn if you were able to perfectly price discriminate?Instructions: In solving this problem, assume the firm cannot sell fractions of a unit. $
Suppose you are trying to determine the pricing for popcorn at a movie theater. There are just two types of customers (for simplicity assume just two total customers). One customer has a low demand for popcorn and will pay $1.00 for 16 oz of popcorn and nothing for a second 16oz. The high demand customer will pay $1.25 for the first 16oz and $0.50 for the second 16oz. If you charge one price for every 16oz a customer buys, what would you charge?