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 $48. Each of the high-value consumers buys one doll and two accessories and is willing to pay $91 in total. Mattel is currently considering two pricing strategies: • Strategy 1: Sell each doll for $24 and each accessory for $24 • Strategy 2: Sell each doll for $5 and each accessory for $43 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 $48 Value, 1 Accessory $91 Value, 2 Accessories ($) ($) ($) Strategy 1 $24 doll + $24 accessory Strategy 2 $5 doll + $43 accessory The strategy that generates the most revenue is strategy 1 or 2? please fill in the chart
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 $48. Each of the high-value consumers buys one doll and two accessories and is willing to pay $91 in total. Mattel is currently considering two pricing strategies: • Strategy 1: Sell each doll for $24 and each accessory for $24 • Strategy 2: Sell each doll for $5 and each accessory for $43 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 $48 Value, 1 Accessory $91 Value, 2 Accessories ($) ($) ($) Strategy 1 $24 doll + $24 accessory Strategy 2 $5 doll + $43 accessory The strategy that generates the most revenue is strategy 1 or 2? please fill in the chart
Chapter14: Transaction Costs, Asymmetric Information, And Behavioral Economics
Section: Chapter Questions
Problem 2.5P
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1. Individual Problems 14-1
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 $48. Each of the high-value consumers buys one doll and two accessories and is willing to pay $91 in total.
Mattel is currently considering two pricing strategies:
| • | Strategy 1: Sell each doll for $24 and each accessory for $24 |
| • | Strategy 2: Sell each doll for $5 and each accessory for $43 |
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
|
|---|---|---|---|
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$48 Value, 1 Accessory
|
$91 Value, 2 Accessories
|
($)
|
|
|
($)
|
($)
|
||
| Strategy 1 | |||
| $24 doll + $24 accessory |
|
|
|
| Strategy 2 | |||
| $5 doll + $43 accessory |
|
|
|
The strategy that generates the most revenue is strategy 1 or 2?
please fill in the chart
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