13: What is the Difference between predatory pricing, tie-in sales, and bundling? 14: At what Price should All Firms Produce at? 15: What should a Firm do for Pricing if it faces Elastic or Inelastic Demand?

13: What is the Difference between predatory pricing, tie-in sales, and bundling? 14: At what Price should All Firms Produce at? 15: What should a Firm do for Pricing if it faces Elastic or Inelastic Demand?

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter9: Monopoly

Section: Chapter Questions

Problem 6.9P

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At a price of $8 per unit, Gadgets Incorporated is willing to supply 19,000 gadgets, while United Gadgets is willing to supply 16,000 gadgets. If the price were to rise to $10 per unit, their respective quantities supplied would rise to 28,000 and 22,000. If these are the only two firms supplying gadgets, what is the elasticity of supply in the market for gadgets? Multiple Choice 1.59 1.4 2.22 0.63
An end-of-aisle price promotion changes the price elasticity of a good from −4 to −5. Suppose the normal price is $48, which equates marginal revenue with marginal cost at the initial elasticity of –4. What should the promotional price be when the elasticity changes to –5? (Hint: In other words, what price will equate marginal revenue and marginal cost?) a. $27.00 b. $45.00 c. $36.00 d. $31.50
Please Help The price elasticity of demand for Rosie's Roses fresh flowers the week of Valentine's Day is 1.10 and is 1.60 other days of the year. If Rosie's Roses faces a constant marginal cost of $0.75 per rose, what is the profit-maximizing off-peak load price to charge on days not on the week of Valentine's Day? 1)$5.00 2)$1.25 3)$8.50 4)$2.00 If Happy Campers has a market share of 70 percent and Campers R Us has a market share of 5 percent, according to Chinese law, Happy Campers ________ be considered a dominant firm and Campers R Us ________ be considered a dominant firm. 1)would; would 2)would not; would not 3)would not; would 4)would; would not If an illegal per se act has been proven to have occurred, there is no defense possible. 1)True 2)False A manager of a firm located in the United States that sells some of its products abroad needs to comply only with United States antitrust law as the firm is only bound by the laws of the country in which it is located. 1)True 2)False…
1) What, is the reason for the "kinked shape of the kinked demand curve? 2) In the above graph, which area represents the elastic, inelastic and unit elastic demand curve? What is total revenue in the elastic, inelastic, and unit elastic portions of the demand curve?
Amazon.com, the online bookseller, wants to increase its total revenue. One strategy is to offer a 10% discount on every book it sells. Amazon.com knows that its customers can be divided into two distinct groups according to their likely responses to the discount. The accompanying table shows how the two groups respond to the discount. Group A (sales per week) Group B (sales per week) Vol. of sales before 10% discount 1.55M 1.50M Vol. of sales after 10% discount 1.65M 1.70M Using the midpoint method, calculate the price elasticities of demand for group A and group B. Explain how the discount will affect total revenue from each group. Suppose Amazon.com knows which group each customer belongs to when he logs on and can choose whether or not to offer the 10% discount. If Amazon.com wants to increase its total revenue, should discounts be offered to group A or to group B, to neither group, or to both groups?
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14. The only DVD rental club available to you charges $4 per movie per day. If your demand curve for movie rentals is given by P = 20 – 2Q, where P is the rental price ($/day) and Q is the quantity demanded (movies per year), what is the annual maximum fee you would be willing to pay to join the club?
Assume that you are in an interview session and the panel asks you to give a pricing decision that will maximize company’s interest (revenue maximization). Price Qd Qs 10 80 20 11 75 30 12 70 40 13 65 50 14 60 60 15 55 70 16 50 80 This is demand and supply schedule, estimate the equations, calculate the elasticity, and justify your positions based on your calculations. Based on your demand equation, what price will maximize the revenue and what would be the elasticity at the revenue maximization point.