Choose two pricing strategies that were discussed in Chapter (Pricing Strategies for Firms with Market Power) that you would implement as the firm manager.
Q: 1. Suppose you are the economic adviser of a company producing three brands of mobile piones; Nekia…
A: Given : Samsung - Increase in price : 800 to 1000,Decrease in quantity : 150 to 100 units Iphone…
Q: What factors contribute to the advantage and disadvantage of various pricing strategies?
A: The factors that determine the advantage and disadvantage of Pricing Policies are:
Q: Q2. Lab Made Liquid Nitrogen Ice Cream Laboratory is the first company introducing the made-to-order…
A: In economics, the law of demand and the law of supply are two important concepts that explain the…
Q: Briefly describe the Stackelberg model. How does this model differ from the Cournot model in terms…
A: The Stackelberg model was introduced by HV Stackelberg, which is an addition to the Cournot model.…
Q: You are the manager of a firm that charges customers $16 per unit for the first unit purchased, and…
A: Given, First purchase price- $16 Additional Purchase price- $12
Q: The Hull Petroleum Company and Inverted V are retail gasoline franchises that compete in a local…
A: Given Demand for Gasoline Q = 80 - 9P The Inverse market demand Q = 80 - 9P9P = 80 - QP = 809-Q9P =…
Q: Suppose that, prior to other firms entering the market, the maker of a new smartphone (Way Cool,…
A: Way cool’s profit in the absence of rival, = $80 million The entry of deterrent price, = -$2…
Q: Your business partner is strongly opposed to your proposal to charge your largest customers lower…
A: Price discrimination is when a producer charges different prices to different consumers for same…
Q: You are the manager of a firm that produces and markets a generic type of soft drink in a…
A: Competing in the competitive market is very challenging for the small firms. As the competitive…
Q: Suppose Mattel, the producer of Barbie dolls and accessories (sold separately), has two types of…
A: *Answer: Gross revenue is how much cash your business creates from selling the items or…
Q: Can you please explain further why are condominiums considered imperfect competition and are…
A: As economies emerged, goods and services were produced that required machinery and labour. With time…
Q: You own a franchise of rental car agencies in Florida. You recently read a report indicating that…
A: The optimal price strategy that defines the above scenario is Peak load pricing.
Q: The Hull Petroleum Company and Inverted V are retail gasoline franchises that compete in a local…
A: Bertrand competition, named after Joseph Louis François Bertrand (1822–1901), is an economics model…
Q: One of the most famous cartels of the past 50 years is OPEC, the Organization of Petroleum Exporting…
A: A country in OPEC has to produce the oil within certain quota limit. It cannot exceed this quota.
Q: A golf club’s owner has commissioned a market study that estimates the average customer’s monthly…
A: (Q) A golf club’s owner has commissioned a market study that estimates the average customer’s…
Q: Suppose the inverse demand for a particular good is given by P= 1200-12Q. Furthermore, there are…
A: Answer -
Q: In 1896, Colgate dental cream was introduced in tubes similar to those we use now. Today, the…
A: Since you have asked a question with multiple sub-parts, we will solve the first three sub-parts for…
Q: With the Firm Y response function Qy=600-1/2Qx and the Firm XX response function Qx=600-1/2Qy…
A: When two(or more firms) are in any kind of competition, one firm's actions will influence another…
Q: Solve for the Bertrand equilibrium for the firms described below if Firm 1's marginal cost is $15…
A: In a Bertrand competition there are 2 firms competing with each other in terms of price. The firms…
Q: You are the manager of a firm that charges customers $16 per unit for the first unit purchased and…
A: Given graph:
Q: Consider the monopoly platform model we studied in the lecture where both sides exert positive…
A: A single product is sold by a single vendor in a single-vendor market. In a monopoly market, the…
Q: Suppose three purchasers of a new car have the following valuations for options: The firm’s costs…
A: If the manager knows the valuation and identity of each consumer, then it may be possible to charge…
Q: who is a spokesman for the association. That includes about 55 cents for the cost of the meat, bun,…
A: 1. The relevant costs are : Material Sourcing Costs : If franchise is a products-based company, then…
Q: According to International Data Corporation (IDC), the number of worldwide smartphone owners will…
A: In this case, the strategy followed by the wireless service provider is Two Part Tariff. Two part…
Q: Suppose Grady, Grace, and George own the 3 wrecker services in the small town of Collisionville.…
A: 1. According to the law of demand, there is an inverse relationship between price and demand. This…
Q: Nile.com, the online bookseller, wants to increase its total revenue. One strategy is to offer a 10%…
A: The price elasticity of demand measures the proportionate change in the quantity demanded of a good…
Q: As a manager of a chain of movie theaters that are monopolies in their respective markets, you have…
A: On weekend demand function is given by, P = 20 – 0.001q Cost will be given by the following equation…
Q: Four firms (A, B, C, and D) play a pricing game (i.e. Bertrand). Each firm (i) may choose any price…
A: In a Bertrand oligopoly, companies select prices (not quantity) independently in order to maximize…
Q: Suppose that Falero is one of more than a hundred competitive firms in New York City that produce…
A: Given; At equilibrium:- Quantity= 5 million Price= $5 per box
Q: Joe has just moved to a small town with only one golf course, the Northlands Golf Club. His inverse…
A: A two-part tariff is a kind of price discrimination used by monopolists to maximize their profit. In…
Q: The information below gives the values different consumer types place on three Microsoft software…
A: Given: Equal number of customers in each market. MC for one more software download is 0.
Q: Which of the following is an example of tacit collusion? a. Price leadership b. Copper…
A: In oligopoly, there are few firms that have a large share in the market. Here, they try to maximize…
Q: The two largest cigarette producers are Phillip Morris and R. J. Reynolds. Both are considering…
A: All relevant elements that may affect the development, regulatory approval, or commercialization of…
Q: Consider two firms that produce the same product and sell it in a market with the following demand…
A: Nash Equilibrium is defined as the state where a player gets his desired outcome without deviating…
Q: Identify nine common pricing methods.
A: Firms price their products in different ways. Correct pricing for the services and products provides…
Q: Joe has moved to a small town with only one golf course. His demand curve is P = 120 – 2Q where Q is…
A: Two-part pricing is another example of price discrimination which contains a membership fee and a…
Q: A firm faces two groups of consumers with different demand equations as follows: Strong demander: Ps…
A: We are going to use two tariff pricing strategy to answer this question
Q: Jones is the manager of an upscale clothing store in a shopping mall that contains only two such…
A: A market is the place where the exchange of goods and services are facilitated. This means that the…
Q: The information in the table below shows the total demand for premium-channel digital cable TV…
A: The ideal conclusion of a game occurs where there is no incentive to depart from the beginning…
Q: Suppose the inverse demand for a particular good is given by P = 1200 – 12Q. Furthermore, th are…
A: Stackelberg duopoly model is the competition between two firm such that one of them is a…
Q: How would customers likely react if a retailer switched its pricing strategy from one to the other?
A:
Q: What kind of market structure is described in the above paragraphs? Describe the key characteristics…
A: In this situation, the company Colgate-Palmolive Company’s brand of toothpaste is the best-selling…
Q: 1. Suppose you are the economic adviser of a company producing three brands of mobile phones; Nokia…
A: I. The midpoint formula for Price elasticity of demand is: Ped = Q1 - Q0Q1 + Q0/2P1 - P0P1 + P0/2…
Q: Monopoly outcome versus perfectly competitive outcome Consider the daily market for hot dogs in a…
A: A perfect market, sometimes known as an atomistic market, is characterized by numerous idealizing…
Imagine that you are the manager of a large clothing company with market power that specializes in selling blue jean pants.
1) Choose two
2) Explain how exactly you would implement these two pricing strategies in the real-world
Step by step
Solved in 2 steps
- You are the manager of a firm that charges customers $16 per unit for the first unit purchased, and $12 per unit for each additional unit purchased in excess of one unit. The accompanying graph summarizes your relevant demand and costs. a. What is the economic term for your firm’s pricing strategy? multiple choice Third degree price discrimination Fourth degree price discrimination First degree price discrimination Second degree price discrimination b. Determine the profits you earn from this strategy. $ c. How much additional profit would you earn if you were able to perfectly price discriminate?Instructions: In solving this problem, assume the firm cannot sell fractions of a unit. $The information in the table below shows the total demand for premium-channel digital cable TV subscriptions in a small urban market. Assume that each digital cable TV operator pays a fixed cost of $200,000 (per year) to provide premium digital channels in the market area and that the marginal cost of providing the premium channel service to a household is zero. 1. Assume there are two profit-maximizing digital cable TV companies operating in this market. Further assume that they are not able to collude on the price and quantity of premium digital channel subscriptions to sell, how many premium digital channel cable TV subscriptions will be sold altogether and what price will be charged when this market reaches a Nash equilibrium? 2. Under the conditions given in Question #3 of this problem, how much profit will each firm earn when this market reaches a Nash equilibrium? 3. What is the socially efficient level of digital premium channel subscriptions for this market and at what…You are the manager of a golf course. For simplicity assume that you only have two potential customers – a high demand customer whose inverse demand for golf services is given by P = 10 – 0.5Q and a low demand customer whose inverse demand for golf services is given by P = 8 – 0.5Q. Suppose the marginal cost to the golf course of each round of golf is zero.Suppose you have to charge both players the same two-part pricing strategy. Which of the following pricing strategies will yield the highest profit for you? A. Charge a fixed fee of €100 and a per unit fee of zero B. Charge a fixed fee of €64 and a per unit fee of zero C. Charge a fixed fee of €64 and a per unit fee of €4 D. Charge a fixed fee of €128 and a fixed fee of zero.
- Suppose you are the economic adviser of a company producing three brands of mobile phones; Nokia 10 , Samsung X and iPhone Z. Suppose further that, your company currently sells 120 units of iPhone Z at ¢800 per unit, 150 units of Samsung X at ¢800 per unit and 200 units of Nokia 10 at ¢100 per unit, but in a bid to maximize profit, the company’s managing director proposes an increase in price of Samsung X from ¢800 to ¢1000 per unit for which quantity demanded is anticipated to fall from 150 to 100 units; iPhone Z from ¢800 to ¢1200 per unit for which quantity demanded is anticipated to fall from 120 to 100 units; and Nokia 10 from¢100 to ¢200 per unit for which quantity demanded is expected to fall from 200 to 100 units. 1.Using the mid-point formula, compute the price elasticity of demand for each brand.2. From your answer in i, what is the type and economic interpretation of each brand’s value of elasticity.Suppose Mattel, the producer of Barbie dolls and accessories (sold separately), has two types of consumers who purchase its dolls: low-value consumers and high-value consumers. Each of the low-value consumers tends to purchase one doll and one accessory, with a total willingness to pay of $44. Each of the high-value consumers buys one doll and two accessories and is willing to pay $82 in total. Mattel is currently considering two pricing strategies: • Strategy 1: Sell each doll for $22 and each accessory for $22 • Strategy 2: Sell each doll for $6 and each accessory for $38 In the following table, indicate the revenue for a low-value and a high-value customer under strategy 1 and strategy 2. Then, assuming each strategy is applied to one low-value and one high-value customer, indicate the total revenue for each strategy. Revenue from Low-Value Customers Revenue from High-Value Customers Total Revenue from Strategy $44 Value, 1 Accessory $82 Value, 2…In 1896, Colgate dental cream was introduced in tubes similar to those we use now. Today, the Colgate-Palmolive Company’s brand of toothpaste is the best-selling toothpaste in the world (ahead of the Crest brand marketed by Procter & Gamble, which was introduced in 1955). While Colgate and Crest enjoy the lion’s share of the toothpaste market, if you view the oral care shelf at your local drugstore or supermarket, you will find over a hundred different varieties of toothpaste. Colgate alone sells over 40 different varieties that are marketed under names ranging from Shrek Bubble Fruit to Colgate Total Advanced Whitening. The high level of product differentiation in the toothpaste market stems from firms introducing new varieties in an attempt to boost their economic profits. In environments where makers of other brands (such as Crest) can easily enter profitable segments of the market, a profitable strategy is to attempt to quickly cover that segment (introducing Shrek Bubble Fruit…
- In 1896, Colgate dental cream was introduced in tubes similar to those we use now. Today, the Colgate-Palmolive Company’s brand of toothpaste is the best-selling toothpaste in the world (ahead of the Crest brand marketed by Procter & Gamble, which was introduced in 1955). While Colgate and Crest enjoy the lion’s share of the toothpaste market, if you view the oral care shelf at your local drugstore or supermarket, you will find over a hundred different varieties of toothpaste. Colgate alone sells over 40 different varieties that are marketed under names ranging from Shrek Bubble Fruit to Colgate Total Advanced Whitening. The high level of product differentiation in the toothpaste market stems from firms introducing new varieties in an attempt to boost their economic profits. In environments where makers of other brands (such as Crest) can easily enter profitable segments of the market, a profitable strategy is to attempt to quickly cover that segment (introducing Shrek Bubble…According to International Data Corporation (IDC), the number of worldwide smartphone owners will soon exceed 1.5 billion. That number is expected to grow at nearly 10 percent per year for the next five years. While the actual cost of a smartphone is about $300, wireless carriers in some countries offer their customers a “free” smartphone with a two-year wireless service agreement. Is this pricing strategy rational? ExplainYou are the manager of BlackSpot Computers, which competes directly with Condensed Computers to sell highpowered computers to businesses. From the two businesses’ perspectives, the two products are indistinguishable. The large investment required to build production facilities prohibits other firms from entering this market, and existing firms operate under the assumption that the rival will hold output constant. The inverse market demand for computers is P=5900-Q , and both firms produce at a marginal cost of $800 per computer. Currently, BlackSpot earns revenues of $4.25 million and profits (net of investment, R&D, and other fixed costs) of $890,000. The engineering department at BlackSpot has been steadily working on developing an assembly method that would dramatically reduce the marginal cost of producing these high-powered computers and has found a process that allows it to manufacture each computer at a marginal cost of $500. How will this technological advance impact your…
- Identify nine common pricing methods.While there is a degree of differentiation between major grocery chains like Albertsons and Kroger, the regular offering of sale prices by both firms for many of their products provides evidence that these firms engage in price competition. For markets where Albertsons and Kroger are the dominant grocers, this suggests that these two stores simultaneously announce one of two prices for a given product: a regular price or a sale price. Suppose that when one firm announces the sale price and the other announces the regular price for a particular product, the firm announcing the sale price attracts 1,000 extra customers to earn a profit of $5,000, compared to the $3,000 earned by the firm announcing the regular price. When both firms announce the sale price, the two firms split the market equally (each getting an extra 500 customers) to earn profits of $2,000 each. When both firms announce the regular price, each company attracts only its 1,500 loyal customers and the firms each earn…While there is a degree of differentiation between major grocery chains like Albertsons and Kroger, the regular offering of sale prices by both firms for many of their products provides evidence that these firms engage in price competition. For markets where Albertsons and Kroger are the dominant grocers, this suggests that these two stores simultaneously announce one of two prices for a given product: a regular price or a sale price. Suppose that when one firm announces the sale price and the other announces the regular price for a particular product, the firm announcing the sale price attracts 1,000 extra customers to earn a profit of $5,000, compared to the $3,000 earned by the firm announcing the regular price. When both firms announce the sale price, the two firms split the market equally (each getting an extra 500 customers) to earn profits of $2,000 each. When both firms announce the regular price, each company attracts only its 1,500 loyal customers and the firms each earn…