Managerial Economics: A Problem Solving Approach
5th Edition
ISBN: 9781337106665
Author: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 14, Problem 14.6IP
To determine
The comparison between mixed bundling and selling separately.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Promoters of a major college basketball tournament estimate that the demand for tickets by adults is QA = 5,000 - 10P and the demand for tickets by students is QS = 10,000 - 100P. The marginal cost and average total cost of seating an additional spectator is constant, MC = $10, The promoters want to segment the market and charge adults and students different prices. What is the profit maximizing ticket price for students?
Suppose that you are in charge of a toll bridge over the Mississippi River. The demand for
bridge crossing Q is given by the following:
2P = 20 - Q
a) How many people would cross the bridge if there were no toll? (YOU MUST SHOW
YOUR WORK TO RECEIVE CREDIT)
b) The toll bridge operator is considering setting up a price of $5.00. At that price, how
many people will cross the bridge? (YOU MUST SHOW YOUR WORK TO RECEIVE
CREDIT)
c) How many people would cross the bridge if the toll is set at $10.00? (YOU MUST
SHOW YOUR WORK TO RECEIVE CREDIT)
Marcella owns a sandwich shop. She decides to charge different prices to groups of customers. She targets one group of potential customers by giving them a discount coupon and the other group gets no coupons.
Which of the following would be a characteristic of the group that does NOT receive the discount coupon?
They _____ than the potential customers who receive coupons.
Select one:
a. have a lower reservation price
b. have a more elastic demand
c. receive equal marginal benefit from the product
d. have a less elastic demand
Chapter 14 Solutions
Managerial Economics: A Problem Solving Approach
Knowledge Booster
Similar questions
- how much should the store charge for each rental if it engages in optimal two-part pricing?arrow_forwardSuppose a local supermarket runs a discount campaign on the sales of shampoos using discount coupons – any customer who shows a discount coupon will be offered an 20% discount on the original retail price. Discuss TWO practical limitations for the supermarket to conduct coupon discount.arrow_forwardThe marginal cost pricing model calculates a markup over marginal costs using estimates of the price elasticity of demand. Will any other pricing strategy result in higher profits?arrow_forward
- There are two movie theaters in the town of Harkinsville: Modern Multiplex (Firm 1) and Galaxy (Firm 2). The demands for each firm are: Q1 = 125 – 3.5P1 + 2P2 and Q2 = 125 – 3.5P2 + 2P1, where quantities are measured in hundreds of moviegoers. Costs per customer are: $4 for Firm 1 and $3 for Firm 2. Instructions: Use no decimals. Use the average cost to calculate monopoly profits. Do not round if values are used to complete other calculations. Use commas (30,000 instead of 30000) Complete the following table. P1 P2 Q1 Q2 Profits F1 Profits F2 Duopoly competition 2,059 Collusion 2,360arrow_forwardThere are two movie theaters in the town of Harkinsville: Modern Multiplex (Firm 1) and Galaxy (Firm 2). The demands for each firm are: Q1 = 125 – 3.5P1 + 2P2 and Q2 = 125 – 3.5P2 + 2P1, where quantities are measured in hundreds of moviegoers. Costs per customer are: $4 for Firm 1 and $3 for Firm 2. Instructions: Use no decimals. Use the average cost to calculate monopoly profits. Do not round if values are used to complete other calculations. Use commas (30,000 instead of 30000) Complete the following table. P1 P2 Q1 Q2 Profits F1 Profits F2 Firm 1 colludes, Firm 2 cheats w/ QDC 2,824 Firm 1 colludes, Firm 2 cheats w/ QBRFarrow_forwardThe demand by senior citizens for showings at a local movie house has a constant price elasticity equal to -6. The demand curve for all other patrons has a constant price elasticity equal to -5. If the marginal cost per patron is $2 per showing, how much should the movie house charge members of each group? Instructions: Round your answers to 2 decimal places. Senior citizens: $ Adults: $arrow_forward
- a) Why does TRUVADA cost $1,780 in the United States whereas it's just $8 in Australia?b) Can you provide other examples of price discrimination?arrow_forwardA nightclub manager realizes that demand for drinks is more elastic among students, and is trying to determine the optimal pricing schedule. Specifically, he estimates the following demands: • Under 25: qr = 18 − 5p • Over 25: q = 10 − 2p The two age groups visit the nightclub in equal numbers on average. Assume that drinks cost the nightclub $4 each. (a) Calculate the market demand.arrow_forwardThe following table shows the daily demand schedule for round-trip flights between Houston and New York City for business travelers: Demand Schedule of Business Travelers Price QD $1,000 300 $800 500 $500 800 $300 1,000 Suppose an airline’s marginal cost per seat for the round-trip flight is $300. For profit-maximization, how much the airline should charge per round-trip? Show your process. (Hint: Apply the “half-way rule” of MR for monopoly).arrow_forward
- I am not sure about thisarrow_forwardWonderland is the only amusement park in a town. Suppose its marginal cost of providing a ride is constant at $3 and an average visitor's demand for rides is given by D(p) = 32 - 4p. If Wonderland wants to maximize its profit using a two-part tariff, how much should it charge for entry per person and how much should it charge for each ride?arrow_forwardThe airline’s use of demand pricing results in passengers paying different prices for essentially the same seat. What is the benefit of this practice to the airline and to the passengers? What is the drawback to the airline and the passengers? Do you think this practice should be continued? If not, what would be the best alternative?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningEconomics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning