An entrepreneur lives between two small beach communities. Her small business sells frozen drinks at both beaches. The inverse demand for frozen drinks at the first beach is p = 20-3 The inverse demand for frozen drinks at the second beach is p=40-q. 2nd attempt Part 1 (1 point) Suppose the entrepreneur sells at the same price in both markets. If she wants to sell 40 frozen drinks, she should set a price per drink of $ Part 2 (1 point) Suppose now that the seller can sell at different prices at each beach. To maximize revenue, the seller should set a price of $ per frozen drink in the first beach community.

An entrepreneur lives between two small beach communities. Her small business sells frozen drinks at both beaches. The inverse demand for frozen drinks at the first beach is p = 20-3 The inverse demand for frozen drinks at the second beach is p=40-q. 2nd attempt Part 1 (1 point) Suppose the entrepreneur sells at the same price in both markets. If she wants to sell 40 frozen drinks, she should set a price per drink of $ Part 2 (1 point) Suppose now that the seller can sell at different prices at each beach. To maximize revenue, the seller should set a price of $ per frozen drink in the first beach community.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter6: Simple Pricing

Section: Chapter Questions

Problem 6MC

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Suppose a retail seller of jeans currently has 40 customers. The retailer offers the following quantity discount to these 40 customers. Buy the 1* pair of jeans at a price of $100, buy a 2d pair of jeans at a price of $80, buy a 3d pair of jeans at a price of $60, and buy a 4th pair of jeans at a price of $40. Suppose the cost to the retailer for each pair of jeans is $40. Suppose of these 40 customers, all buy the 1ª pair of jeans, 30 of these 40 buy a 2nd pair of jeans, 20 of these 30 (i.e., those who bought a 2nd pair) buy a 3d pair, and 10 of the 20 (i.e., those who bought a 3rd pair) buy a 4t pair. The profit to the retailer from selling jeans to these 40 customers in this way equals: [10] A. $4000 В. С. $4600 $6200 D. None of the above [11] In the case of first degree price discrimination, each consumer is charged his/her reservation price. А. True В. False
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