Whether A can price the technologically integrated bundle according to their wish, if A iPod played only iTunes and iTunes could be heard only on A iPod and if other electronic music could be played on an iPod, whether there are any limitations on the bundled pricing of iTunes and iPods.

Question

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Answer 1

Question

Chapter 16, Problem 1E

To determine

To Explain: Whether A can price the technologically integrated bundle according to their wish, if A iPod played only iTunes and iTunes could be heard only on A iPod and if other electronic music could be played on an iPod, whether there are any limitations on the bundled pricing of iTunes and iPods.

Expert Solution & Answer

Answer to Problem 1E

The limitation of pricing of the technologically integrated bundle of iPods and iTunes has been explained.

Explanation of Solution

The prices of the bundled products, like A iPods and iTunes, are on a higher side in the market, when compared to other similar products from competitive firms. The widely popular iTunes of A has a huge demand in the market when compared to the other electronic music.

If A adopts the strategy that iTunes can be heard only on A iPods, then the prices of the bundled product can be kept according to the way A wants it to be. However, the limitation would be that, this could decrease the sales of the product, as customers may look for alternative and competitive products. On the contrary if the other electronic music can also be heard in A iPods then A can bring down its prices, since demand and sales will increase.

Economics Concept Introduction

Introduction: The process in which a set of goods or services are priced and marketed as a combined product is called bundled pricing.

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A firm operates with the production function Q = K2 L. Q is the number of units of output per day when the firm rents K units of capital and employs L workers each day. The manager has been given a production target: to produce 8,000 units per day. She knows that the daily rental price of capital is $400 per unit and the wage rate is $200 day. a. What is the returns to scale of this production function? Show mathematically. b. Currently the firm employs 80 workers per day. What is the firm’s daily total cost if it rents just enough capital to produce at its target? c. Compare the marginal product per dollar spent on K and on L when the firm operates at the input choice in part (b). What does this suggest about the way the firm might change its choice of K and L if it wants to reduce the total cost in meeting its target? Explain your answer very clearly. d. In the long run, how much K and L should the firm choose if it wants to minimize the cost of producing 8,000 units of output a day?…

Answer 2

Question

Chapter 16, Problem 1E

To determine

To Explain: Whether A can price the technologically integrated bundle according to their wish, if A iPod played only iTunes and iTunes could be heard only on A iPod and if other electronic music could be played on an iPod, whether there are any limitations on the bundled pricing of iTunes and iPods.

Expert Solution & Answer

Answer to Problem 1E

The limitation of pricing of the technologically integrated bundle of iPods and iTunes has been explained.

Explanation of Solution

The prices of the bundled products, like A iPods and iTunes, are on a higher side in the market, when compared to other similar products from competitive firms. The widely popular iTunes of A has a huge demand in the market when compared to the other electronic music.

If A adopts the strategy that iTunes can be heard only on A iPods, then the prices of the bundled product can be kept according to the way A wants it to be. However, the limitation would be that, this could decrease the sales of the product, as customers may look for alternative and competitive products. On the contrary if the other electronic music can also be heard in A iPods then A can bring down its prices, since demand and sales will increase.

Economics Concept Introduction

Introduction: The process in which a set of goods or services are priced and marketed as a combined product is called bundled pricing.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 16, Problem 1E

To determine

To Explain: Whether A can price the technologically integrated bundle according to their wish, if A iPod played only iTunes and iTunes could be heard only on A iPod and if other electronic music could be played on an iPod, whether there are any limitations on the bundled pricing of iTunes and iPods.

Expert Solution & Answer

Answer to Problem 1E

The limitation of pricing of the technologically integrated bundle of iPods and iTunes has been explained.

Explanation of Solution

The prices of the bundled products, like A iPods and iTunes, are on a higher side in the market, when compared to other similar products from competitive firms. The widely popular iTunes of A has a huge demand in the market when compared to the other electronic music.

If A adopts the strategy that iTunes can be heard only on A iPods, then the prices of the bundled product can be kept according to the way A wants it to be. However, the limitation would be that, this could decrease the sales of the product, as customers may look for alternative and competitive products. On the contrary if the other electronic music can also be heard in A iPods then A can bring down its prices, since demand and sales will increase.

Economics Concept Introduction

Introduction: The process in which a set of goods or services are priced and marketed as a combined product is called bundled pricing.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 16, Problem 1E

To determine

To Explain: Whether A can price the technologically integrated bundle according to their wish, if A iPod played only iTunes and iTunes could be heard only on A iPod and if other electronic music could be played on an iPod, whether there are any limitations on the bundled pricing of iTunes and iPods.

Expert Solution & Answer

Answer to Problem 1E

The limitation of pricing of the technologically integrated bundle of iPods and iTunes has been explained.

Explanation of Solution

The prices of the bundled products, like A iPods and iTunes, are on a higher side in the market, when compared to other similar products from competitive firms. The widely popular iTunes of A has a huge demand in the market when compared to the other electronic music.

If A adopts the strategy that iTunes can be heard only on A iPods, then the prices of the bundled product can be kept according to the way A wants it to be. However, the limitation would be that, this could decrease the sales of the product, as customers may look for alternative and competitive products. On the contrary if the other electronic music can also be heard in A iPods then A can bring down its prices, since demand and sales will increase.

Economics Concept Introduction

Introduction: The process in which a set of goods or services are priced and marketed as a combined product is called bundled pricing.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 16, Problem 1E

To determine

To Explain: Whether A can price the technologically integrated bundle according to their wish, if A iPod played only iTunes and iTunes could be heard only on A iPod and if other electronic music could be played on an iPod, whether there are any limitations on the bundled pricing of iTunes and iPods.

Expert Solution & Answer

Answer to Problem 1E

The limitation of pricing of the technologically integrated bundle of iPods and iTunes has been explained.

Explanation of Solution

The prices of the bundled products, like A iPods and iTunes, are on a higher side in the market, when compared to other similar products from competitive firms. The widely popular iTunes of A has a huge demand in the market when compared to the other electronic music.

If A adopts the strategy that iTunes can be heard only on A iPods, then the prices of the bundled product can be kept according to the way A wants it to be. However, the limitation would be that, this could decrease the sales of the product, as customers may look for alternative and competitive products. On the contrary if the other electronic music can also be heard in A iPods then A can bring down its prices, since demand and sales will increase.

Economics Concept Introduction

Introduction: The process in which a set of goods or services are priced and marketed as a combined product is called bundled pricing.

Answer 6

Chapter 16, Problem 1E

To determine

To Explain: Whether A can price the technologically integrated bundle according to their wish, if A iPod played only iTunes and iTunes could be heard only on A iPod and if other electronic music could be played on an iPod, whether there are any limitations on the bundled pricing of iTunes and iPods.

Expert Solution & Answer

Answer to Problem 1E

The limitation of pricing of the technologically integrated bundle of iPods and iTunes has been explained.

Explanation of Solution

The prices of the bundled products, like A iPods and iTunes, are on a higher side in the market, when compared to other similar products from competitive firms. The widely popular iTunes of A has a huge demand in the market when compared to the other electronic music.

If A adopts the strategy that iTunes can be heard only on A iPods, then the prices of the bundled product can be kept according to the way A wants it to be. However, the limitation would be that, this could decrease the sales of the product, as customers may look for alternative and competitive products. On the contrary if the other electronic music can also be heard in A iPods then A can bring down its prices, since demand and sales will increase.

Economics Concept Introduction

Introduction: The process in which a set of goods or services are priced and marketed as a combined product is called bundled pricing.

Answer 7

Chapter 16, Problem 1E

To determine

To Explain: Whether A can price the technologically integrated bundle according to their wish, if A iPod played only iTunes and iTunes could be heard only on A iPod and if other electronic music could be played on an iPod, whether there are any limitations on the bundled pricing of iTunes and iPods.

Answer 8

Expert Solution & Answer

Answer to Problem 1E

The limitation of pricing of the technologically integrated bundle of iPods and iTunes has been explained.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

The prices of the bundled products, like A iPods and iTunes, are on a higher side in the market, when compared to other similar products from competitive firms. The widely popular iTunes of A has a huge demand in the market when compared to the other electronic music.

If A adopts the strategy that iTunes can be heard only on A iPods, then the prices of the bundled product can be kept according to the way A wants it to be. However, the limitation would be that, this could decrease the sales of the product, as customers may look for alternative and competitive products. On the contrary if the other electronic music can also be heard in A iPods then A can bring down its prices, since demand and sales will increase.