The Camera Shop sells two popular models of digital SLR cameras (Camera A Price: $200, Camera B Price: $300). The sales of these products are not independent of each other, but rather if the price of one increase, the sales of the other will increase. In economics, these two camera models are called substitutable products. The store wishes to establish a pricing policy to maximize revenue from these products. A study of price and sales data shows the following relationships between the quantity sold (N) and prices (P) of each model: NA = 195 - 0.6PA + 0.25PB NB = 301 + 0.08PA - 0.5PB Construct a model for the total revenue and implement it on a spreadsheet. Develop a two-way data table to estimate the optimal prices for each product in order to maximize the total revenue. Vary each price from $250 to $500 in increments of $10. Max revenue occurs at Camera A price of $ Max revenue occurs at Camera B price of $

Panini, a popular sandwich shop, offers 3 types of sandwiches: Grill vegetables, grilled chicken and pastrami. The table below provides demand data: Pastrami Grilled Vegetables Grilled Chicken Demand per hour 25 25 10 There are up to five steps in the process of making sandwiches, listed below with activity times. Only 50% of customers want their sandwich toasted, no matter which sandwich is ordered. Step Grilled Vegetables Grilled Chicken Pastrami Cut bread 75 minutes .75 minutes .75 minutes Grill 1.9 minutes 1.9 minutes Slice meat 3 minutes Toast 2 minutes 2 minutes 2 minutes Wrap .75 minutes .75 minutes .75 minutes Suppose Panini employs 1 worker at each step. What is the implied utilization of the bottleneck of this process?

At a particular street corner are two competing sandwich shops: Tony’s and Diana’s. Both have been doing well selling delicious veggie sandwiches, so much so that they both increase their prices in response to rising demand. Use the data shown in the table below to calculate both Tony’s and Diana’s supply elasticity for veggie sandwiches. Which sandwich shop seems better situated to meet the rising demand for veggie sandwiches?   QS1 Price1 QS2 Price2 Tony's 100 $5.00 125 $6.00 Diana's 65 $6.95 75 $8.50   Please answer both questions, as I am unsure of how to go about them

Suppose you are managing a farming company, which is one of the major producers of Tomato in the State of North Carolina. You have been provided with the following graph which shows the demand curve for the tomatoes that your company is producing. As you can see, there are two known points (X and Y) on a demand curve for tomatoes. According to the “standard" method of computing elasticity (i.e. use the standard formula of percentage change in your computations), the standard-method price elasticity of demand for tomatoes when moving from point X to point Y is approximately Demand 10 20 30 40 50 60 70 80 90 100 QUANTITY (Thousands of pounds of tomatoes)

Suppose you are trying to determine the pricing for popcorn at a movie theater. There are just two types of customers (for simplicity assume just two total customers). One customer has a low demand for popcorn and will pay $1.00 for 16 oz of popcorn and nothing for a second 16oz. The high demand customer will pay $1.25 for the first 16oz and $0.50 for the second 16oz.  If you charge one price for every 16oz a customer buys, what would you charge?

Noticing that profits on college text books are very high, the Beast Book Store (BBS), with the help of a venture capitalist, has gone into text book publishing. In its current production range its average total cost is approximately equal to its marginal cost which it estimates to be about $25. It has estimated that price elasticity of demand for its books at current price levels to be about -1.5. The manager of BBS uses mark-up pricing to price the books that it sells using a 150% mark-up (even with this mark-up BBS can still underprice most other book publishers). Assuming that BBS wants to maximize short-term profits on its book sales and initially enjoys a monopoly in the local college textbook production market, is this a good pricing procedure? Harvard and other local colleges soon start publishing companies of their own increasing competition and causing the price elasticity of demand for BBS books to increase to -2.0. Assuming that BBS’s demand curve that generates this -2.0…

Clubs often do some buying and selling during fundraisers, working with a vendor to make mugs, T-shirts, hoodies etc. that display the club's logo. There can be big savings for bulk orders. DiscountMugS (http://www.discountmugs.com) is an on-line company with this kind of service. Suppose a high school group orders T-shirts for a fundraiser. The table below shows the pricing shown on the webslte. Note that the fixed cost Involved in setting up the printing with the logo is absorbed into the pricing schedule. 576+ 1008+ 2016+ Quantity Cost per T S5.55 $4.90 $4.86 12+ 24+ 36+ 72+ 144+ 288+ $4.73 $4.62 $4.58 $4.42 $4.01 S3.59 a) We have seen problems for which breaking even was the goal, but in the context of fundraising the idea of break-even is not really the point! The goal may be to raise enough funds for, say, the choir to take part in an out of state competition, or for the Odyssey of the Mind team to go to World's. If the club is comfortable charging $8 per T-shirt how many must be…

GameZone, a video games store, is considering the best way to price two new games – a first-person shooter (FPS) and a racing game. There are four types of consumers that might buy the games with roughly equal numbers of each type, and their willingness to pay (WTP) for each game is detailed in the table below (assume that the willingness-to-pay for a second game of the same type is zero). How should Gamezone price the two games separately to maximise revenue? How should Gamezone price a bundle of both games to maximise revenue? Is there an alternative (involving bundling) that generates more revenue than either single prices or a bundle alone? Under what condition/s is bundling likely to increase profits for a firm?   Consumer Type WTP for FPS game WTP for racing game A $120 $70 B $70 $120 C $160 $10 D $10 $160

You manage a movie theater that can handle up to 8,000 patrons per week. The current demand, price, and elasticity for ticket sales, popcorn, soda, and candy are given in below. The theater keeps 45 percent of ticket revenues. Unit cost per ticket, popcorn sales, candy sales, and soda sales are also given. Assuming linear demand curves, how can the theater maximize profits? Demand for foods is the fraction of patrons who purchase the given food.   Elasticity Current Price Demand Cost Ticket 3 8 3000 0 Popcorn 1.3 3.5 0.5 0.4 Soda 1.5 3 0.6 0.6 Candy 2.5 2.5 0.2 1

In the Current Events article, it mentioned how DoorDash is trying to increase its amount of subscription users (DashPass). The price for DashPass is $10 per month. Assume the demand for regular DoorDash deliveries (non-subscription) is: P = 20 - 0.04Q where P is the delivery fee on the order. Assume the goal of the company is to maximize combined revenue from both regular deliveries (delivery fees) and the subscription fees (DashPass). A different manager suggest pricing the deliveries at $14 per delivery. Which of the following actions would you select as a manager? Group of answer choices Advise that it should be a $10 fee per delivery Advise that the$14 delivery fee is too low Advise that it should be a $20 fee per delivery Agree that $14 per delivery is optimal in this situation