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If Connecting U wants to MAXIMIZE its profits, what should they do? a) Connecting U should maintain their price at $16. Dropping the price would decrease their total revenue and profits. b)Connecting U should drop their price to $14.48. By dropping the price, they would increase their total revenue and profits.

If Connecting U wants to MAXIMIZE its profits, what should they do? a) Connecting U should maintain their price at $16. Dropping the price would decrease their total revenue and profits. b)Connecting U should drop their price to $14.48. By dropping the price, they would increase their total revenue and profits.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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If Connecting U wants to MAXIMIZE its profits, what should they do?

a) Connecting U should maintain their price at $16. Dropping the price would decrease their total revenue and profits.

b)Connecting U should drop their price to $14.48. By dropping the price, they would increase their total revenue and profits.

is the answer b?

 

Note- look at the info on the right-hand side of the pic 

Executive Materials Midpoint Formula Connecting U Data If we drop our price by 10 percent to $14.48 (according to the midpoint formula), our 10,000 customers will purchase 4 gigabytes of data (a 33.34 percent increase). Connecting U Data Connecting U Executive Oh, and our total monthly cost is $300,000. Dropping our price and offering more gigabytes of data will have no impact on our costs, as the marginal cost of providing another gigabyte of data is zero. Quantity of Gigabytes per Price per Gigabyte Customer (per month) Connecting U $16.00 3 Executive $14.48 4 Here is a summary of our data... Connecting U Executive Joe, if Connecting U wants to maximize its profits (the equivalent of maximizing revenue in this case), what should they do? • We have 10,000 customers who have the same demand for gigabytes of data as Jamming Joe. • Our total monthly cost is $300,000. Curious Cally • Dropping our price and offering more gigabytes of data will have no impact on our costs, as the marginal cost of providing another gigabyte of data is zero. Connecting U should maintain their price at $16. Dropping the price would decrease their total revenue and profits. Connecting U should drop the price to $14.48. By dropping the price, they will increase their total revenue and profits.
Transcribed Image Text:Executive Materials Midpoint Formula Connecting U Data If we drop our price by 10 percent to $14.48 (according to the midpoint formula), our 10,000 customers will purchase 4 gigabytes of data (a 33.34 percent increase). Connecting U Data Connecting U Executive Oh, and our total monthly cost is $300,000. Dropping our price and offering more gigabytes of data will have no impact on our costs, as the marginal cost of providing another gigabyte of data is zero. Quantity of Gigabytes per Price per Gigabyte Customer (per month) Connecting U $16.00 3 Executive $14.48 4 Here is a summary of our data... Connecting U Executive Joe, if Connecting U wants to maximize its profits (the equivalent of maximizing revenue in this case), what should they do? • We have 10,000 customers who have the same demand for gigabytes of data as Jamming Joe. • Our total monthly cost is $300,000. Curious Cally • Dropping our price and offering more gigabytes of data will have no impact on our costs, as the marginal cost of providing another gigabyte of data is zero. Connecting U should maintain their price at $16. Dropping the price would decrease their total revenue and profits. Connecting U should drop the price to $14.48. By dropping the price, they will increase their total revenue and profits.
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