The table below shows how much the a non-Manchester United fan and a Manchester United fan would pay for an annual subscription to Manchester United TV. The marketing team at Manchester United decides to offer two packages: a basic package that includes all games of the main, youth and women's teams (delayed by one day) and a deluxe package that includes the games (delayed by one day), recording of games from past seasons, and exclusive player interviews. Because there are many more non-Manchester United fans, the marketing team decides to offer the basic package for $30 to attract these fans. What is the maximum price they can charge for the deluxe package if they want Manchester United fans to subscribe to the deluxe package rather than also subscribing to the basic package. Manchester United TV Subscription (annual) Value to a non-Manchester United soccer fan Value to Manchester United fans Basic Package $30 $120 Deluxe Package $40 $200 O 119.99 O 109.99 O 189.99 O 179.99

The table below shows how much the a non-Manchester United fan and a Manchester United fan would pay for an annual subscription to Manchester United TV. The marketing team at Manchester United decides to offer two packages: a basic package that includes all games of the main, youth and women's teams (delayed by one day) and a deluxe package that includes the games (delayed by one day), recording of games from past seasons, and exclusive player interviews. Because there are many more non-Manchester United fans, the marketing team decides to offer the basic package for $30 to attract these fans. What is the maximum price they can charge for the deluxe package if they want Manchester United fans to subscribe to the deluxe package rather than also subscribing to the basic package. Manchester United TV Subscription (annual) Value to a non-Manchester United soccer fan Value to Manchester United fans Basic Package $30 $120 Deluxe Package $40 $200 O 119.99 O 109.99 O 189.99 O 179.99

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Realizing that there is a great potential for increased tax revenue, government officials in Homeyville began discussing how they could align Airbnb rentals with hotel stays from a tax perspective. Fast-forward to 2018, at which time Homeyville has finally made tax arrangements with Airbnb to levy a $40-per-room tax on rentals. However, now the market conditions have changed. More hosts have now entered the Airbnb market, and awareness of this hotel alternative has increased demand. The following graph shows the demand and supply curves for Airbnb rentals in 2018. Use the green rectangle (triangle symbols) to illustrate the area representing the revenue raised by a $40-per-room tax. Then use the black point (cross symbol) to shade the area representing the deadweight loss generated by this tax. PRICE (Dollars per rental) 200 190 180 Demand 2018 Tax Wedge 170 + 160 150 140 130 120 110 100 0 + 40 80 120 160 200 240 280 RENTALS (Rooms per day) Supply 2018 320 360 400 Tax Revenue…
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
A profit-maximizing ten-pin bowing club segments its market by practicing third-degree price discrimination. It charges juniors $4 per game based on their price elasticity of demand of –2.0. Its adult customers have a price elasticity of demand of –1.4. The marginal cost per game does not vary by the customer’s age. What price does the ten-pin bowling club charge adult customers?
Demand Factor Initial Value Average American household income $40,000 per year Round trip airfare from Los Angeles (LAX) to Las Vegas (LAS) $200 per round trip Room rate at the Lucky Hotel and Casino, which is near the Big Winner $200 per night Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. Graph Input Tool Market for Big Winner's Hotel Rooms 500 I Price (Dollars per room) 450 200 400 Quantity Demanded (Hotel rooms per night) 300 350 300 250 Demand Factors 200 150 Average Income (Thousands of dollars) Demand 40 100 50 Airfare from LAX to LAS (Dollars per round trip) 200 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Hotel rooms) Room Rate at Lucky (Dollars per night) 200 PRICE (Dollars per room)
The demand for a new computer game can be modeled by p(x) = 43-4 In x, for 0sxS800, where p(x) is the price consumers will pay, in dollars, and x is the number of games sold, in thousands. Recall that total revenue is given by R(x) =x•p(x). Complete parts (a) through (c) below. a) Find R(x). R(x) = b) Find the marginal revenue, R'(x). R'(x) =O c) How many units will be sold if the price that consumers are willing to pay is $40? The number of units that will be sold is (Round to the nearest whole number as needed.)
Joe has just moved to a small town with only one golf course, the Northlands Golf Club. His inverse demand function is p=140-2q, where q is the number of rounds of golf that he plays per year. The manager of the Northlands Club negotiates separately with each person who joins the club and can therefore charge individual prices. This manager has a good. idea of what Joe's demand curve is and offers Joe a special deal, where Joe pays an annual membership fee and can play as many rounds as he wants at $20, which is the marginal cost his round imposes on the Club. Joe marries Susan, who is also an enthusiastic golfer. Susan wants to join the Northlands Club. The manager believes that Susan's inverse demand curve is p=120-2q. The manager has a policy of offering each member of a married couple the same two-part prices, so he offers them both a new deal. What two-part pricing deal maximizes the club's profit? Will this new pricing have a higher or lower access fee than in Joe's original…
The Star Theater is the only movie theater in Hollywood, SC, and therefore it has price-setting power. The Star Theater has two distinct types of customers: (i) senior citizens and (ii) non-senior citizens. The demand curve among senior citizens is: y₁ = 100-10p₁, for p₁ 10, where y₁ is the number of seats demanded by senior citizens at a senior citizen ticket price of p1. The demand curve among non-senior citizens is: y2 = 140-10p2, for p2 14, where y2 is the number of seats demanded by non-senior citizens at a non-senior citizen ticket price of p2. The Star Theater's cost function is C(31, 32) = C(y1 + y2) = F + (y1 + y2), where F is the fixed cost of operating the theater and y₁ and y2 are (as already defined) the number of senior citizen and non-senior citizen customers, respectively. By how much does the Star Theater increase profits if it operates as a third-degree price discriminator instead of as a single-price monopolist? $0 $10 $20 $30
Sal's satellite company broadcasts TV to subscribers in Los Angeles and New York. The demand functions for each of these two groups are QNY =40-0.2PNY QLA=80-0.5PLA where Q is in thousands of subscriptions per year and P is the subscription price per year. The cost of providing Q units of service is given by C = 1000 + 60Q where Q Suppose Sal can charge only a single price. QNY + QLA %3D What price should he charge, and what quantities will he sell in New York? A. $115.71, 18 В. $130, 14 C. $110, 25 D. $115.71, 22
k : ces As the manager of Smith Construction, you need to make a decision on the number of homes to build in a new residential area where you are the only builder. Unfortunately, you must build the homes before you learn how strong demand is for homes in this large neighborhood. There is a 50 percent chance of low demand and a 50 percent chance of high demand. The corresponding (inverse) demand functions for these two scenarios are P= 300,000-400Q and P= 500,000 -225Q, respectively. Your cost function is CQ) = 165,000+ 243,750Q. How many new homes should you build, and what profits can you expect? Number of homes you should build: homes Profits you can expect: $1
For each of the following scenarios, begin by assuming that all demand factors are set to their original values and that Triple Sevens is charging $200 per room per night. If average household income increases by 20%, from $50,000 to $60,000 per year, the quantity of rooms demanded at the Triple Sevensrises from rooms per night to rooms per night. Therefore, the income elasticity of demand is , meaning that hotel rooms at the Triple Sevens are .
Pizzaroni Cafe on the boardwalk in a popular New Jersey seaside town owned by Angelo McDonald. Situation: Due to the booming tourist season and the exceptional meals he prepares, Angelo is frequently forced to turn away patrons because he does not have enough room to accommodate everyone or because he does not have enough servers and kitchen help, especially on Friday and Saturday nights. Currently, the Pizzaroni Cafe has several pinball and video games that are barely earning enough to pay their monthly rental fees. Angelo brags that the tables in his establishment are exceptionally roomy and have large areas of space in- between tables. Chuck’s Hoagie House, the eating establishment alongside of him in the same building has difficulty attracting patrons due to a rumor that several customers contracted food poisoning last September at his establishment. A) What possible options are available to Angelo to increase the number of patrons he can serve in the short run in an effort to…