Homework Help is Here – Start Your Trial Now!
Business
Economics
7. The Acme Software Corp. has developed - at a cost of $500,000 - two software programs for computers: a word processor; and a spreadsheet. Acme's marketing department has determined that there are three categories of potential buyers of these programs - but there is no way of identifying an individual's category at the time of sale. The three categories, along with the numbers of (annual) buyers and the maximum willingness to pay (w.t.p.) of each group, are provided in the following table. Since this is software, the marginal costs of producing and selling (online) are zero.

7. The Acme Software Corp. has developed - at a cost of $500,000 - two software programs for computers: a word processor; and a spreadsheet. Acme's marketing department has determined that there are three categories of potential buyers of these programs - but there is no way of identifying an individual's category at the time of sale. The three categories, along with the numbers of (annual) buyers and the maximum willingness to pay (w.t.p.) of each group, are provided in the following table. Since this is software, the marginal costs of producing and selling (online) are zero.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
See similar textbooks
icon
Related questions
Question

Part B C D

i need in words

not handwritten solution please

c. Is there a difference between your answers to #a and #b? Explain. d. Acme's V.P. for Marketing - Ms. Lotta Sales - has hired you as a consultant to advise her as to whether there is a way for Acme to change its pricing, so as to increase its profits. Is there any specific advice that you can give her? Explain.
Transcribed Image Text:c. Is there a difference between your answers to #a and #b? Explain. d. Acme's V.P. for Marketing - Ms. Lotta Sales - has hired you as a consultant to advise her as to whether there is a way for Acme to change its pricing, so as to increase its profits. Is there any specific advice that you can give her? Explain.
7. The Acme Software Corp. has developed - at a cost of $500,000 - two software programs for computers: a word processor; and a spreadsheet. Acme's marketing department has determined that there are three categories of potential buyers of these programs - but there is no way of identifying an individual's category at the time of sale. The three categories, along with the numbers of (annual) buyers and the maximum willingness to pay (w.t.p.) of each group, are provided in the following table. Since this is software, the marginal costs of producing and selling (online) are zero. Number of Buyer category potential buyers Generalist 10,000 10,000 Sort-of geek Super-geek 10,000 W.t.p. for word processor $60 $50 $25 W.t.p. for spreadsheet $50 $125 $140 a. Acme currently sells the two programs separately. If Acme is maximizing its profits, what price is it charging for each program? Explain. b. What would be the price for each program that would maximize the sum of consumer surplus plus producer surplus? Explain
Transcribed Image Text:7. The Acme Software Corp. has developed - at a cost of $500,000 - two software programs for computers: a word processor; and a spreadsheet. Acme's marketing department has determined that there are three categories of potential buyers of these programs - but there is no way of identifying an individual's category at the time of sale. The three categories, along with the numbers of (annual) buyers and the maximum willingness to pay (w.t.p.) of each group, are provided in the following table. Since this is software, the marginal costs of producing and selling (online) are zero. Number of Buyer category potential buyers Generalist 10,000 10,000 Sort-of geek Super-geek 10,000 W.t.p. for word processor $60 $50 $25 W.t.p. for spreadsheet $50 $125 $140 a. Acme currently sells the two programs separately. If Acme is maximizing its profits, what price is it charging for each program? Explain. b. What would be the price for each program that would maximize the sum of consumer surplus plus producer surplus? Explain
Expert Solution
steps

Step by step

Solved in 4 steps with 4 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Health Insurance
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS