Imagine that you are advising a small new car dealership. They ask: A) given the information below, what is the best price they should put on all the cars, assuming every buyer pays the same price and how much profit will they make? B) is there a better way to make profits and how much profit could they make? why might this strategy be difficult to use? The firm can't change their costs. But they could use a different pricing scheme, not charging every customer the same price. Fixed cost for business is $4000 Variable cost is $20,000 for each car they get from the manufacturer. They anticipate the following customers. Ms. Rich would pay up to $30,000 Mr. Upper Middle would pay up to $26,000 Ms. Middle would pay up to $22,000 Mr. Lower Middle would pay up to $18,000 Ms. Poor would pay up to $16,000
Imagine that you are advising a small new car dealership. They ask:
A) given the information below, what is the best
B) is there a better way to make profits and how much profit could they make? why might this strategy be difficult to use? The firm can't change their costs. But they could use a different pricing scheme, not charging every customer the same price.
Fixed cost for business is $4000
Variable cost is $20,000 for each car they get from the manufacturer.
They anticipate the following customers.
Ms. Rich would pay up to $30,000
Mr. Upper Middle would pay up to $26,000
Ms. Middle would pay up to $22,000
Mr. Lower Middle would pay up to $18,000
Ms. Poor would pay up to $16,000
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