Consider a live performance company. The company plans to provide a concert for four weeks. The estimated weekly demand functions are as follows: Week 1 2 3 Estimated Demand Function d(p) = 1000-10p d(p) = 900-8p d(p) = 800 - 6p d(p) = 600-4p The current capacity is 400 per week. Assume that the variable and fixed costs are zero. When the company uses variable prices (i.e., charges different prices for different weeks), how much it will increase the total profits compared to when the company uses a single price?

Consider a live performance company. The company plans to provide a concert for four weeks. The estimated weekly demand functions are as follows: Week 1 2 3 Estimated Demand Function d(p) = 1000-10p d(p) = 900-8p d(p) = 800 - 6p d(p) = 600-4p The current capacity is 400 per week. Assume that the variable and fixed costs are zero. When the company uses variable prices (i.e., charges different prices for different weeks), how much it will increase the total profits compared to when the company uses a single price?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter11: Price And Output Determination: Monopoly And Dominant Firms

Section: Chapter Questions

Problem 6E

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