9. Is bundling profitable?Suppose that Ginny is the owner of the only nonmotorized water sports rental shop on a small lake in New Hampshire. At Ginny's shop, customers canrent a variety of items such as canoes, paddle boats, tubes, and windsurfers. Assume that the marginal cost of renting out any of these items is $5per item. Moreover, there are only two types of customers-college students and retired peopie-and there are equal numbers of each type ofcustomer. The following table shows the willingness to pay of both customer types for paddle boats, and tubes.Willingness to Pay(Dollars)(Dollars)ItemCollege Students Retired PeoplePaddle boats2530Tubes610If Ginny rents out paddle boats and tubes separately, the best she can do is to charge sfor a paddie boat rental and Sfor a tuberental, At these prices, her total profit is sfrom a market consisting of one of each type of customer.Now, supposehat Ginny will allow customers only to purchase a rental bundle for paddle boats and tubes, with no option of renting either itemindividually. In this case, the bundle price that maximizes her profit is 5. which yields a total profit of 5Given the valuations in the previous table, itprofitable for Ginny to bundle her water sport equipment. This is due, in part, to the fact thatthe valuations of both consumer types arecorrelated.

Hi! Thank you for the question, As per the honor code, we are allowed to answer three sub-parts at a…

9. Is bundling profitable? Suppose that Ginny is the owner of the only nonmotorized water sports rental shop on a small lake in New Hampshire. At Ginny's shop, customers cam rent a variety of items such as canoes, paddie boats, tubes, and windsurfers. Assume that the marginal cost of renting out any of these items is s5 per item. Moreover, there are only two types of customers-college students and retired people-and there are equal numbers of each type of customer. The following table shows the willingness to pay of both customer types for paddle boats, and tubes. Willingness to Pay (Dollars) (Dollars) College Students Retired People Item Paddie boats 25 30 Tubes 10 If Ginny rents out paddle boats and tubes separately, the best she can do is to charge S for a paddie boat rental and S for a tube rental. At these prices, her total profit is S from a market consisting of one of each type of customer.

9. Is bundling profitable? Suppose that Ginny is the owner of the only nonmotorized water sports rental shop on a small lake in New Hampshire. At Ginny's shop, customers cam rent a variety of items such as canoes, paddie boats, tubes, and windsurfers. Assume that the marginal cost of renting out any of these items is s5 per item. Moreover, there are only two types of customers-college students and retired people-and there are equal numbers of each type of customer. The following table shows the willingness to pay of both customer types for paddle boats, and tubes. Willingness to Pay (Dollars) (Dollars) College Students Retired People Item Paddie boats 25 30 Tubes 10 If Ginny rents out paddle boats and tubes separately, the best she can do is to charge S for a paddie boat rental and S for a tube rental. At these prices, her total profit is S from a market consisting of one of each type of customer.

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter22: Frontiers Of Microeconomics

Section: Chapter Questions

Problem 8PA

See similar textbooks

Similar questions

2
3. Suppose there is a ten-kilometre-long two-lane highway from the suburbs to the city centre. It costs drivers twenty cents per kilometre in monetary costs plus ten cents per minute in the (opportunity) cost of their time travelling. Therefore, the total cost of the trip depends positively on the travel time. a. The number of vehicles per lane per hour (V) is the quantity and the total cost of the trip is the price. Suppose the (inverse) demand for travel is estimated to be p = 34.76 0.0183 V and the (inverse) supply of travel is estimated to be p = 0.04+0.0034 V. Find the competitive equilibrium price (total cost) and number of vehicles per lane per hour. - b. Since the more vehicles per lane per hour causes the average speed to be reduced, an additional vehicle per lane per hour not only increases the time travelled for that driver but also for all the other drivers as well. Suppose the extra time is estimated to be 0.016 additional minutes per vehicle per lane per hour. What is the…
Suppose the ISP is considering decreasing the price it charges by $20. Because of the price effect, total revenue will fall by The graph below depicts the monthly demand facing the only Internet service provider (ISP) that serves customers in a small town. Currently, the ISP charges a price of $110 per month and serves 8 thousand customers. Type here to search O Part 2 Price 100 150 140 130 120 100 10 Internet Service Number of Customers in 1,000 4 Suppose the ISP is considering decreasing the price it charges by $20. Because of the price effect, total revenue will fall by $ thousand. Suppose the ISP is considering decreasing the price it charges by $20. Because of the output effect, total revenue will rise by S thousand.
4. John Stain estimates that the demand curve for his PaneMaster insulated windows is given by 350-2P Q Currently, John is charging $150 per window, including installation. John is considering a sale. Find the price elasticity of demand for PaneMaster Windows and comment on the advisability of a sale. = a) EQp = -0.67 so the consequences of a sale cannot be determined b) Eqp = -0.67, so a sale would increase profits c) EQp = -6.00, so the consequences of a sale cannot be determined d) EQp = -6.00, so a sale would increase profits
Think back to a purchase that you made recently. How would you describe your thinking before you made that purchase?
3. Suppose that you operate a parking lot in downtown Milwaukee. Your cost for allowing another vehicle to park in your lot is virtually zero – therefore, the only thing you care about is getting as much revenue as you possibly can. Price per hour |A $6 B 5. 4 2 1 G 200 300 400 500 600 100 Hours per day a. Suppose that you raise the price of parking from $3 to $4. Draw the price effect and the quantity effect on the graph. b. Calculate the price effect and the quantity effect (note that the sign of each effect is important)! c. Is your demand curve elastic, inelastic, or unit elastic between $3 and $4? Given that you want to raise as much revenue as possible, do you want to raise the price from $3 to $4?
8 3 & 4) . Due in 2 days HW3_11 Homework Answered ||| Put in order from most price sensitive (first) to least price sensitive (last) in terms of elasticity of demand. Drag and drop options into correct order and submit. For keyboard navigation... SHOW MORE ✓ E Medical care: -0.17 M ||| SAM SAM - Project Assignment Submission III app.tophat.com Answered Tobacco: -0.45 Restaurant Meals: -1.6 17/17 answered Leisure travel: -2.4 HW3_12 Homework Answered 10am_Fall22_Microecon_ Kris' Kabobs: Kris decides to drop the price of his famous Kabobs from $3 to $2. Last week at $3 he sold 240 and this week at $2 he sold We can use this information to determine the elasticity of demand for the Kabobs. Do that! (correct sign and 2 decimal places in your answer)
Read the article. How important are cellphones in our lives right now? Do you ever see them becoming a necessity? Explain.
17_economics
What can you do if there are too many passengers for your car? O Offer to take half the party, or cancel at no charge Take them all anyway O Cancel and.complain to Uber O None of the above
21. Mahal is the owner of Muning Meow Meow Day Care, a pet-sitting service. Pet owners bring their cats to Mahal's facility in Kamuning, Quezon City, where they are either given private accommodations or are put in a large pen with other cats. (Private accommodations are more expensive.) Mahal and her employees feed the cats twice a day; those cats in private accommodations are also given two exercise periods per day. Owners pay half the daily fee at the start of the day, and the other half when they pick up the dog at the end of the day; owners must also certify that their cats have had all required vaccinations. As Mahal's company is a day care service, no cats stay the night in her facility. Mahal accepts cash, checks, Gcash, Paymaya, and major credit cards in payment. Mahal is interested in developing a comprehensive internal control plan for Muning Meow Meow Day Care; she has approached you, as a consultant, for assistance. Which of the following group of concepts related to…
Hi there just wanting answer to question 2 C. Using the infromation provided from the first picture Cheers