Question 2: (Product Line) Consider the Product line pricing problem discussed in class. Assume that every consumer in the market buys at most one toy. The following table gives you the WTP for two segments. VERSIONS Variable Cost/unit Children Toddler Segment Size 100 K (ii) 200 K Toy A $5 $15 $10 Toy B $ 15 $35 $20 (i) If we are to launch only one version, which one should it be and what should be the price? Should this firm launch multiple versions? If yes, what prices should we choose and what would be total profits? If no, why not?
Question 2: (Product Line) Consider the Product line pricing problem discussed in class. Assume that every consumer in the market buys at most one toy. The following table gives you the WTP for two segments. VERSIONS Variable Cost/unit Children Toddler Segment Size 100 K (ii) 200 K Toy A $5 $15 $10 Toy B $ 15 $35 $20 (i) If we are to launch only one version, which one should it be and what should be the price? Should this firm launch multiple versions? If yes, what prices should we choose and what would be total profits? If no, why not?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![Question 2: (Product Line) Consider the Product line pricing problem discussed in class. Assume
that every consumer in the market buys at most one toy. The following table gives you the WTP for
two segments.
VERSIONS
Variable Cost/unit
Children
Toddler
(i)
Segment Size
100 K
200 K
Toy A
$5
$15
$10
Toy B
$15
$35
$20
If we are to launch only one version, which one should it be and what should be the
price?
Should this firm launch multiple versions? If yes, what prices should we choose and
what would be total profits? If no, why not?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2db6dea4-17b3-417b-8d89-0d1eff4fd34d%2Fb9ec2927-d355-4408-a4bd-b4809088b218%2Fjdq9jw_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Question 2: (Product Line) Consider the Product line pricing problem discussed in class. Assume
that every consumer in the market buys at most one toy. The following table gives you the WTP for
two segments.
VERSIONS
Variable Cost/unit
Children
Toddler
(i)
Segment Size
100 K
200 K
Toy A
$5
$15
$10
Toy B
$15
$35
$20
If we are to launch only one version, which one should it be and what should be the
price?
Should this firm launch multiple versions? If yes, what prices should we choose and
what would be total profits? If no, why not?
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