Question 2: (Product Line) Consider the Product line pricing problem discussed in class. Assumethat every consumer in the market buys at most one toy. The following table gives you the WTP fortwo segments.VERSIONSVariable Cost/unitChildrenToddler(i)Segment Size100 K200 KToy A$5$15$10Toy B$15$35$20If we are to launch only one version, which one should it be and what should be theprice?Should this firm launch multiple versions? If yes, what prices should we choose andwhat 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?

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?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter18: Asymmetric Information

Section: Chapter Questions

Problem 18.3P

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