Gelateria Ltd, uses an old family recipe for chocolate ice cream to start up their own icecream company. They figure out that they can produce and sell this ice cream at a unit cost of30p per scoop. Luckily, they can strike a deal with the University of Portsmouth to be theirexclusive ice cream retailer on campus. 2,000 of the university's students would potentiallybuy one scoop of ice cream each per day over the summer, 1,000 of whom would be willingto pay up to 80p per scoop of this particular ice cream and 1,000 even £1.2 per scoop.а)What is the optimal uniform price for this chocolate ice cream? How much profit willGelateria make at this price?In an attempt to further increase their profit, they conduct some market research whichyields the result that the students with high willingness to pay would be willing to payeven up to £2 per scoop if they used organic chocolate. However, the other students'willingness to pay for this higher quality would only be slightly higher than for theb)regular ice cream, at 90p per scoop. The production cost for the higher quality is 40pper scoop higher than for the regular variety. Construct the optimal screening contract,explaining the participation and the incentive compatibility constraints.Is the contract identified in (b) the overall optimal contract?

Given information Cost of ice-cream =0.30 per scoop Potential buyer=2000 Willingness to pay for 1000…

Gelateria Ltd, uses an old family recipe for chocolate ice cream to start up their own ice cream company. They figure out that they can produce and sell this ice cream at a unit cost of 30p per scoop. Luckily, they can strike a deal with the University of Portsmouth to be their exclusive ice cream retailer on campus. 2,000 of the university's students would potentially buy one scoop of ice cream each per day over the summer, 1,000 of whom would be willing to pay up to 80p per scoop of this particular ice cream and 1,000 even £1.2 per scoop. а) What is the optimal uniform price for this chocolate ice cream? How much profit will Gelateria make at this price? b) In an attempt to further increase their profit, they conduct some market research which yields the result that the students with high willingness to pay would be willing to pay even up to £2 per scoop if they used organic chocolate. However, the other students' willingness to pay for this higher quality would only be slightly higher than for the

Gelateria Ltd, uses an old family recipe for chocolate ice cream to start up their own ice cream company. They figure out that they can produce and sell this ice cream at a unit cost of 30p per scoop. Luckily, they can strike a deal with the University of Portsmouth to be their exclusive ice cream retailer on campus. 2,000 of the university's students would potentially buy one scoop of ice cream each per day over the summer, 1,000 of whom would be willing to pay up to 80p per scoop of this particular ice cream and 1,000 even £1.2 per scoop. а) What is the optimal uniform price for this chocolate ice cream? How much profit will Gelateria make at this price? b) In an attempt to further increase their profit, they conduct some market research which yields the result that the students with high willingness to pay would be willing to pay even up to £2 per scoop if they used organic chocolate. However, the other students' willingness to pay for this higher quality would only be slightly higher than for the

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

You are a small retailer. You make profit by buying from a large producer and reselling at your store. The price you're selling at does not change with how many units you sell. The producer recently raised their price to 150 a unit, so you're considering vertical integration and making your own products. If the fixed cost of vertical integrating is 1,200 and you can produce with a cost of 70 per unit, how many units do you have to sell for the vertical integration to yield the same profit as before? Enter your answer here
Fast please with steps
The cost of producing 5-gallon water bottles is given by C(q) = 0.005q2 + 2q + 1000. If 2000 5-gallon water bottles are produced, fint the average cost
Conduct the Five forces analysis for the company "Under Armour".
You manufacture ceramic lawn ornaments. After several months your accountant tells you that your profit P(n) can be modeled by the function P(n)= -0.002n^2+5.2n-1208 where n is number of ornaments sold each month. A) How many ornaments must you make and sell to break even. B) How many ornaments must you make and sell to maximize profit. C) What is the maximum profit. D) How many ornaments must you make and sell in order to earn a profit of $1657.
Suppose that you can sell as much of a product (in integer units) as you like at $60 per unit. Your marginal cost (MC) for producing the qth unit is given by: MC = 7q This means that each unit costs more to produce than the previous one (e.g., the first unit costs 7*1, the second unit (by itself) costs 7*2, etc.). If fixed costs are $80, what is the optimal integer output level? Please specify your answer as an integer. If fixed costs are $80, what is the profit at the optimal integer output level? Please specify your answer as an integer.
Thranduil company’s market research department is working on the pricing of a product. The field research shows that average demand is expected to be 8000 units at price 50 TL. From this point, each 1 TL change in price will negatively affect demand with a magnitude of 100 units. Fixed and variable costs are confronted for producing the product. According to the information obtained from the financial department, 200,000 TL is the estimate of fixed costs and 20 TL is the estimate of variable costs per unit produced. Assume that all units produced are sold.Which of the following prices is the one that maximizes the company's profit?
enata and Jerome operate a company that makes miniature electronic surveillance drones from a warehouse in an industrial estate. Each drone costs them $49 to make and has additional fixed costs of $275 (per drone). On average, Renata and Jerome sell 85 drones per week for a price of $64 each. Renata and Jerome then decide to have a sale and reduces the price of each drone to an even numbered price between $54 and $60 inclusive. During the sale, they sell on average 150 devices per week. Q.Plot Total Cost, Total Revenue and Profit Functions on the same set of axes and Find the Marginal Revenue (MR) and Marginal Cost (MC) functions by differentiation and determine the level of output q at which MR = MC. With reference to your Excel plot, what conclusion can you make about this value?
The manufacturer of Brand A automobile tires claims that its tire can save 120 gallons of fuel over 54,000 miles of driving, as compared to a popular competitor (Brand B). If gasoline costs $4.00 per gallon, how much per mile driven does this tire save the customer (Brand A versus Brand B)? The savings are $ per mile. (Round to three decimal places.)
compute a piece rate for an employee earning $17.75/hour where the standard time per unit is ten (10) minutes