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Consider a mid-sized college town located about twenty miles outside of a major city. The residents can be categorized into 3 distinct groups of consumers - college students, professionals who work in the city, and retired people. Shopmart is the only supermarket in this college town and the manager has determined that there are 300 customers purchasing Colgate oral care products. Specifically, the manager has determined that there are 100 college students, 100 professionals, and 100 retirees purchasing Colgate's dental floss, toothpaste, and mouthwash. The manager is also aware that consumers willingness to pay varies across group and whether the products are sold separately or as a bundle. The table below provides each group's valuation on dental floss, toothpaste, and mouthwash. Consumer Group Dental Floss Toothpaste Mouthwash ($) ($) ($) College Students 2.65 4.75 6.60 Professionals Retirees 5.00 6.00 7.00 4.50 5.00 3.75 If Shopmart chooses to offer these three products separately, and assuming that the supermarket faces a constant marginal cost of $0.05 per product provided, the optimal price for dental floss is A/ dollars. The optimal price for toothpaste is A/ dollars and the optimal price for mouthwash is A/ dollars.

Consider a mid-sized college town located about twenty miles outside of a major city. The residents can be categorized into 3 distinct groups of consumers - college students, professionals who work in the city, and retired people. Shopmart is the only supermarket in this college town and the manager has determined that there are 300 customers purchasing Colgate oral care products. Specifically, the manager has determined that there are 100 college students, 100 professionals, and 100 retirees purchasing Colgate's dental floss, toothpaste, and mouthwash. The manager is also aware that consumers willingness to pay varies across group and whether the products are sold separately or as a bundle. The table below provides each group's valuation on dental floss, toothpaste, and mouthwash. Consumer Group Dental Floss Toothpaste Mouthwash ($) ($) ($) College Students 2.65 4.75 6.60 Professionals Retirees 5.00 6.00 7.00 4.50 5.00 3.75 If Shopmart chooses to offer these three products separately, and assuming that the supermarket faces a constant marginal cost of $0.05 per product provided, the optimal price for dental floss is A/ dollars. The optimal price for toothpaste is A/ dollars and the optimal price for mouthwash is A/ dollars.

Managerial Economics: A Problem Solving Approach
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
Chapter17: Making Decisions With Uncertainty
Section: Chapter Questions
Problem 6MC
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Consider a mid-sized college town located about twenty miles outside of a major city. The residents can be categorized into 3 distinct groups of consumers - college students, professionals who work in the city, and retired people. Shopmart is the only supermarket in this college town and the manager has determined that there are 300 customers purchasing Colgate oral care products. Specifically, the manager has determined that there are 100 college students, 100 professionals, and 100 retirees purchasing Colgate's dental floss, toothpaste, and mouthwash. The manager is also aware that consumers willingness to pay varies across group and whether the products are sold separately or as a bundle. The table below provides each group's valuation on dental floss, toothpaste, and mouthwash. Consumer Group Dental Floss Toothpaste Mouthwash ($) ($) ($) College Students 2.65 4.75 6.60 Professionals Retirees 5.00 6.00 7.00 4.50 5.00 3.75 If Shopmart chooses to offer these three products separately, and assuming that the supermarket faces a constant marginal cost of $0.05 per product provided, the optimal price for dental floss is A/ dollars. The optimal price for toothpaste is A/ dollars and the optimal price for mouthwash is A/ dollars.
Transcribed Image Text:Consider a mid-sized college town located about twenty miles outside of a major city. The residents can be categorized into 3 distinct groups of consumers - college students, professionals who work in the city, and retired people. Shopmart is the only supermarket in this college town and the manager has determined that there are 300 customers purchasing Colgate oral care products. Specifically, the manager has determined that there are 100 college students, 100 professionals, and 100 retirees purchasing Colgate's dental floss, toothpaste, and mouthwash. The manager is also aware that consumers willingness to pay varies across group and whether the products are sold separately or as a bundle. The table below provides each group's valuation on dental floss, toothpaste, and mouthwash. Consumer Group Dental Floss Toothpaste Mouthwash ($) ($) ($) College Students 2.65 4.75 6.60 Professionals Retirees 5.00 6.00 7.00 4.50 5.00 3.75 If Shopmart chooses to offer these three products separately, and assuming that the supermarket faces a constant marginal cost of $0.05 per product provided, the optimal price for dental floss is A/ dollars. The optimal price for toothpaste is A/ dollars and the optimal price for mouthwash is A/ dollars.
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