(Table: Maximum Willingness to Pay II) The marginal cost of a one-night stay and one round of golf are $50 and $10, respectively. Which of the following statements is (are) TRUE? Maximum Willingness to Pay One-Night One Round of Stay $180 170 100 Golf Parv Mahika Carina $50 70 80 1. If a firm is using a pure bundling strategy, the bundle price should be set at $230 to maximize producer surplus. II. Suppose a firm uses the following mixed bundling strategy: the bundle price is $240, or the price for a one-night stay is $180 and the price per round of golf is $80. With this strategy, producer surplus is $380. III. If a firm prices each item separately such that the price for a one-night stay is $100 and the price per round of golf is $50, producer surplus will be $270. 1, II, and III Il and II O l and III

(Table: Maximum Willingness to Pay II) The marginal cost of a one-night stay and one round of golf are $50 and $10, respectively. Which of the following statements is (are) TRUE? Maximum Willingness to Pay One-Night One Round of Stay $180 170 100 Golf Parv Mahika Carina $50 70 80 1. If a firm is using a pure bundling strategy, the bundle price should be set at $230 to maximize producer surplus. II. Suppose a firm uses the following mixed bundling strategy: the bundle price is $240, or the price for a one-night stay is $180 and the price per round of golf is $80. With this strategy, producer surplus is $380. III. If a firm prices each item separately such that the price for a one-night stay is $100 and the price per round of golf is $50, producer surplus will be $270. 1, II, and III Il and II O l and III

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Please see the images of the article below and help answer questions. 1. Evaluate this statement: "Whereas a competitive firm must sell at the market price, a monopoly owns its market, so it can set its own prices. Since it has no competition, it produces at the quantity and price combination that maximizes its profits." Must a perfectly competitive firm sell at a market-clearing price? Alternatively, is the market-clearing price the profit-maximizing price that a competitive firm chooses to set? Can a monopolist set any (price, quantity) combination? 2. Evaluate this statement: "Monopolies drive progress because the promise of years or even decades of monopoly profits provides a powerful incentive to innovate. Then monopolies can keep innovating because profits enable them to make the long-term plans and finance the ambitious research projects that firms locked in competition can't dream of." Cite a counter-example to this claim in which deregulation of a monopolist led to lower…
2. "The competition commission investigated the high data prices in South Africa in 2017. The report, which was presented two years later, found that the data services market is "highly concentrated" with a duopoly of the leading cell phone operators - MTN and Vodacom".Based on the paragraph given above, which of the statements is CORRECT?A. Highly concentrated market benefits consumers as they have many, many choices available to them.B. Highly concentrated market restricts consumer welfareC. Highly concentrated market is an excellent reason for government to reduce regulationD. Highly concentrated market increases consumer welfare
1.1. Optimal pricing. There two consumers, Alice and Bob, and two kinds of products A and B. Alice and Bob have valuations according to the table AB Alice 34 62 Bob 55 90 You sell the products and it costs you nothing to produce them. You know this table, but when Alice or Bob walk into your store, you cannot tell who they are. That is, if Alice walks in, you do not know if perhaps it is Bob instead who walked in, and vice-versa. What is the optimal pricing plan for the two products?
A small town with a movie theater has 300 adults and 200 seniors. The theater is considering putting on a special one-time screening of a new movie. This screening has a fixed cost of $2,000, but the marginal cost of selling an additional ticket is zero. According to a survey, all the adults and seniors would be willing to purchase the tickets at $7 and $4 respectively. a. What prices would the movie theater charge for an adult ticket and for a senior's ticket if it wanted to maximize profit? Explain and calculate the profit. b. Suppose a law is passed that prohibits the movie theater from charging different prices to adults and seniors. What price would it set for a ticket now? What is the profit? c. Who is worse off because of the law prohibiting price discrimination? Who is better off? d. If the fixed cost of the concert was $2,500 rather than $2,000, how would your answers to parts-(e) change?
7) Candice wants to sell two types of chocolate bars, Dark (D) and White (W) to three consumers: A, B, and C. Each consumer's reservation price for each bar is given in the figure below. Candice purchases each bar at a cost of 1. Candice considers practicing either pure or mixed bundling. What is the maximum profits Candice can earn? BC 0 3 2 2 A Dark White 3
3. EFC Corporation, which manufactures goods at three locations at D, E, F. The firm distributes the goods through regional were-house located at A, B, C. The firm has found that production costs per good are identical for each factory, and hence the only relevant costs are those of shipping from each factory (D, E and F) to each destination (A, B and C). Assume the cost constant regardless of the volume shipped. Table below shows supply, demand and cost for a unit of transportation. Transport Table for EFC Corporation To From D E F A 2 4 4 B 4 450 3 5 Were-house 500 Requirement (DD) Find out solution for this problem via: a. North west corner approach b. Minimum cell rules approach C 350 c. Vogel Approximated approach. d. Steppingstone method approach. e. Modified distribution approach (MODI). 5 2 Factory Capacity (SS) 350 350 3 600 1300 L
100.00 90.00 80.00 70.00 60.00 50.00 40.00 30.00 20.00 10.00 $40 $20 $100 0 $60 2 4 MR Suppose that Vanessa who owns a Zumba fitness center in rural Indiana can identify her customers' demand. How much would she charge in order to achieve 1st degree (=perfect) price discrimination? MC ATC D 6 8 10 Quantity (clients per day)
2
Price a aa a Ps PA P3 P2 T P₁ Q₁ 82 (P2-P1) × Q2 (P3-P1) × Q2 (P2-P1) × Q1 (P4-P1) × Q1 S MC la AVC ATC Quantity Refer to the figure. When market price is P₁, which area represents a profit-maximizing firm's losses?
8. Natural monopoly analysis The following graph gives the demand (D) curve for water services in the fictional town of Streamship Springs. The graph also shows the marginal revenue (MR) curve, the marginal cost (MC) curve, and the average total cost (ATC) curve for the local water company, a natural monopolist. On the following graph, use the black point (plus symbol) to indicate the profit-maximizing price and quantity for this natural monopolist. ? PRICE (Dollars per hundred cubic feet) 40 36 32 28 24 20 16 12 8 0 0 1 MR 2 8 3 4 5 6 7 QUANTITY (Hundreds of cubic feet) ATC True MC False 9 10 The water company must own a scarce resource. D Which of the following statements are true about this natural monopoly? Check all that apply. The water company is experiencing economies of scale. The water company is experiencing diseconomies of scale. + In order for a monopoly to exist in this case, the government must have intervened and created it. Monopoly Outcome True or False: Without…
4. Suppose a manufacturer and its retailer face the problem of double marginalization described in my notes, Section 11.1. If the manufacturer sets the wholesale price equal to its marginal cost c and in addition, requires the retailer to pay a fraction a (between 0 and 1) of its profit. Write down the retailer's profit maximization problem. Will this practice solve the double marginalization problem? (That is, will this 4.a practice maximize their joint profit?) 4.k Suppose the retailer is required to pay a fraction of a of its sales (i.e., total revenue). Write down the retailer's profit maximization problem. Will this practice solve the double marginalization problem?
2) ABC Corp. is selling a children's alphabet book and an iPad app. Suppose the reservation prices for four consumers are given by the table below: Aaron Cost Betsy Carolyn Desmond Book 11 12 7 4 3 App 5 2 9 10 1 a) If ABC prices them separately, what prices should it charge, and how much profit does it make? b) If the Corp. prices the products as a bundle, and only offers the bundle, what price should it charge and how much profit does it make? c) If ABC Corp. offers the book or app separately but also offers a bundle, what prices should it charge, and how much profit does it make?