Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN: 9781305506381
Author: James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher: Cengage Learning
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Chapter 2, Problem 4E
To determine
The
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QUESTION 8
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
189.99
O 179 99
The French government announced plans to convert state-owned power firms EDF and GDF into separate limited companies that
operate in geographically distinct markets. BBC News reported that France's CFT union responded by organizing a mass strike, which
triggered power outages in some Paris suburbs. Union workers are concerned that privatizing power utilities would lead to large-scale
job losses and power outages similar to those experienced in parts of the eastern coast of the United States and parts of taly in 2003.
Suppose that prior to privatization, the price per kilowatt hour of electricity was Co.f and that the inverse demand for electricity in
each of these two regions of France is estimated as P-1.4 -0.0010 in euros). Furthermore, to supply electricity to its particular region
of France, it costs each firm ag - 110 + 010 in euros). Once privatized, each firm will have incentive to maximize profits.
Determine the number of kilowatt hours of electricity each firm wil produce and…
Suppose you manage a large company’s marketing department and are responsible for deciding whether or not to advertise in the Super Bowl. Your team of analysts estimate that for each advertisement, your firm would generate $6 million in additional revenue for the company. It cost $7 million to run a 30-second advertisement. Therefore, your company would expect to lose $1 million in profit for each advertisement.
Explain why it could still be worthwhile to purchase an advertisement, even though you know in advancethat your company would lose $1.5 million in profit
Chapter 2 Solutions
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
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