Professional or Home but not both). Suppose that your objective is to maximize the total revenue from selling the software. Further, you do not know the identity of either buyer and you must sell by posting one price for Link Professional and another price for Link Home. Each buyer seeks to maximize her consumer surplus and may buy Link Professional or Link Home or neither depending on the prices that you post. Please show all intermediate steps and clearly explain your reasoning. i. What is the optimal price and resulting revenue under the following scenario? What (if anything) would each customer buy? ii. If you could identify each buyer and make targeted offers, what price would you offer to each and how much revenue would you earn? What (if anything) would each customer buy Scenario The willingness to pay (WTP) of the 2 potential buyers is: WTP of Buyer A WTP of Buyer B Link Professional 600 500 Link Home 400 300

Professional or Home but not both). Suppose that your objective is to maximize the total revenue from selling the software. Further, you do not know the identity of either buyer and you must sell by posting one price for Link Professional and another price for Link Home. Each buyer seeks to maximize her consumer surplus and may buy Link Professional or Link Home or neither depending on the prices that you post. Please show all intermediate steps and clearly explain your reasoning. i. What is the optimal price and resulting revenue under the following scenario? What (if anything) would each customer buy? ii. If you could identify each buyer and make targeted offers, what price would you offer to each and how much revenue would you earn? What (if anything) would each customer buy Scenario The willingness to pay (WTP) of the 2 potential buyers is: WTP of Buyer A WTP of Buyer B Link Professional 600 500 Link Home 400 300

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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10.
Q5) Distinguish between marginal pricing and cost-plus pricing.