Suppose Mattel, the producer of Barbie dolls and accessories (sold separately), has two types of consumers who purchase its dolls: low-value consumers and high-value consumers. Each of the low-value consumers tends to purchase one doll and one accessory, with a total willingness to pay of $44. Each of the high-value consumers buys one doll and two accessories and is willing to pay $82 in total.Mattel is currently considering two pricing strategies:•Strategy 1: Sell each doll for $22 and each accessory for $22•Strategy 2: Sell each doll for $6 and each accessory for $38 In the following table, indicate the revenue for a low-value and a high-value customer under strategy 1 and strategy 2. Then, assuming each strategy is applied to one low-value and one high-value customer, indicate the total revenue for each strategy. Revenue from Low-Value CustomersRevenue from High-Value CustomersTotal Revenue from Strategy$44 Value, 1 Accessory$82 Value, 2 Accessories($)($)($)Strategy 1$22 doll + $22 accessory Strategy 2$6 doll + $38 accessory The strategy that generates the most revenue is strategy ______ (1 or 2) .

*Answer: Gross revenue is how much cash your business creates from selling the items or…

Answered: Suppose Mattel, the producer of Barbie…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose Mattel, the producer of Barbie dolls and accessories (sold separately), has two types of consumers who purchase its dolls: low-value consumers and high-value consumers. Each of the low-value consumers tends to purchase one doll and one accessory, with a total willingness to pay of $44. Each of the high-value consumers buys one doll and two accessories and is willing to pay $82 in total.

Mattel is currently considering two pricing strategies:

•	Strategy 1: Sell each doll for $22 and each accessory for $22
•	Strategy 2: Sell each doll for $6 and each accessory for $38

In the following table, indicate the revenue for a low-value and a high-value customer under strategy 1 and strategy 2. Then, assuming each strategy is applied to one low-value and one high-value customer, indicate the total revenue for each strategy.

	Revenue from Low-Value Customers	Revenue from High-Value Customers
$44 Value, 1 Accessory	$82 Value, 2 Accessories	($)
($)	($)
Strategy 1
$22 doll + $22 accessory
Strategy 2
$6 doll + $38 accessory

The strategy that generates the most revenue is strategy ______ (1 or 2) .

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