(b) Suppose the following consumer's have the reserve prices (Table 1) for two goods, sold by the same firm. The good is produced and sold at 0 marginal cost. Table 1 Good 1 (Reserve Price $) Good 2 (Reserve Price $) Consumer 1 7 2 3 3 9. 4 3 8 4 The optimal bundle price for the firm is $

(b) Suppose the following consumer's have the reserve prices (Table 1) for two goods, sold by the same firm. The good is produced and sold at 0 marginal cost. Table 1 Good 1 (Reserve Price $) Good 2 (Reserve Price $) Consumer 1 7 2 3 3 9. 4 3 8 4 The optimal bundle price for the firm is $

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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3. Suppose a company produces 2 products, X and Y, and has 3 potential buyers, A, B, and C. The following table summarizes each potential buyer's willingness to pay for each good: A В C 4 3 Y For simplicity, assume there is no production cost.
Please do not give solution in image formate thanku. The demand for airline travel is quite sensitive to price. Typically, there is an inverse relationship to between demand and price; when price decreases, demand increases and vice versa. One major airline has found that when the price (p) for a round trip between Chicago and Los Angeles is $600, the demand (D) is 500 passengers per day. When the price is reduced to $400, demand is 1,200 passengers per day. Use a data table to estimate the price that maximizes total revenue.
GameZone, a video games store, is considering the best way to price two new games – a first-person shooter (FPS) and a racing game. There are four types of consumers that might buy the games with roughly equal numbers of each type, and their willingness to pay (WTP) for each game is detailed in the table below (assume that the willingness-to-pay for a second game of the same type is zero). How should Gamezone price the two games separately to maximise revenue? How should Gamezone price a bundle of both games to maximise revenue? Is there an alternative (involving bundling) that generates more revenue than either single prices or a bundle alone? Under what condition/s is bundling likely to increase profits for a firm? Consumer Type WTP for FPS game WTP for racing game A $120 $70 B $70 $120 C $160 $10 D $10 $160
4. An economic consultant provides a firm's marketing manager with the following estimate of the demand function for the firm's product: Qx = 1240 – 3.13Px - 0.611P, + 2.01M + 0.30AX Px = the price of the firm's product per unit; Py = the price of another good per unit; M = money income for the average consumer; Ax = advertising costs for the firm's product. The demand function shown above indicates that: A. The firm's good (X) and the other good (Y) are substitutes and that X is an inferior good B. The firm's good (X) and the other good (Y) are complements and that X is an inferior good C. The firm's good (X) and the other good (Y) are substitutes and that X is a normal good D. The firm's good (X) and the other good (Y) are complements and that X is a normal good
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The widget market is competitive and includes no transaction costs. Five suppliers are willing to sell one widget at the following prices: $26, $14, $10, $5, and $3 (one seller at each price). Five buyers are willing to buy one widget at the following prices: $10, $14, $26, $34, and $42 (one buyer at each price). For each price shown in the following table, use the given information to enter the quantity demanded and quantity supplied. Price Quantity Demanded Quantity Supplied ($ per widget) (widgets) (widgets) $3 $5 $10 $14 $26 $34 $42 In this market, the equilibrium price will be per widget, and the equilibrium quantity will be widgets.
QUESTION 21 (Table: GoGo Gas and Fanny's Fantastic Fuel) Use Table: GoGo Gas and Fanny's Fantastic Fuel. The table shows a payoff matrix for GoGo Gas and Fanny's Fantastic Fuel in a small town. Each firm can set either a high price or a low price, and customers view both gas stations as nearly perfect substitutes. Profits in each cell of the payoff matrix are given as (GoGo's profit, Fanny's profit). If each firm sets the price independently, the Nash equilibrium outcome will be: Table: GoGo Gas and Fanny's Fantastic Fuel Fanny's Fantastic Fuel High Price S100, S100 $25, $150 $150, $25 Low Price High Price Low Price GoGo Gas $50, $50 O a $100, $100. b. $150, $25. c. $25, $150. d. S50, $50
Which market structure gives more consumer surplus, Cournot (simultaneous) orStackelberg (sequential)? Explain your answer.
DuopolyMarket for mechanical pencils can be described by the following demand schedule:Price | Number of pencils demanded$6 | 80$5 | 200$4 | 320$3 | 440$2 | 560$1 | 680$0 | 800The fixed cost is $340, while the variable cost is $0.50.d) If there were two firms on the market and they agreed to cooperate, how much would eachfirm need to produce? Follow the procedure outlined in the lecture and show that the otherfirm would prefer to deviate from the agreement.e) When the firms deviate from the agreement, there is a new optimal level of output. Showwhether the firms have an incentive to deviate from that level?f) If there were two firms on the market, what would be the price and the quantity of pencilstraded if the firms couldn’t cooperate?
A new office building was constructed 5 years ago by a consulting engineering firm. At that time the firm obtained a bank loan for $600,000 with a 12% annual interest rate, compounded quarterly. The loan terms call for equal quarterly payments for 10 years. The loan also allows for its prepayment at any time without penalty. The firm proposes to refinance the loan through an insurance company. The new loan would be for a 20-year term with an interest rate of 8% per year, compounded quarterly. The insurance company requires the payment of a 5% loan initiation charge (often described as a “5-point loan fee”), which will be added to the starting balance. (a) What is the balance due on the original mortgage if 16 payments have been made? (b) What is the difference between the old and new quarterly payments?
Consider the demand curve illustrated in the figure to the right. Suppose at a price of $8 per unit, a firm's corresponding revenue is represented by the green shaded area. 10.00- 9.00- What is the firm's revenue? 8.00- The firm's revenue equals $0. (Enter your 7.00- response as an integer.) 6.00- 5.00- 4.00- 3.00- 2.00- 1.00- Demand 0.00- 200 1000 400 Quantity 600 800 Price ($ per unit)