MANAGERIAL/ECON+BUS/STR CONNECT ACCESS
9th Edition
ISBN: 2810022149537
Author: Baye
Publisher: MCG
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Chapter 11, Problem 14PAA
To determine
To know:Whether pricing strategy is rational or not.
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- Please type your NUMERICAL answer in the space below. ENTER ONLY THE NUMBER. IF answers are in decimals, please round the number to one decimal point. Winterfell Cable TV pays $100,000 per year to earn exclusive rights to air a premium sports channel. There are two types of subscribers in Winterfell: 3,000 die-hard sports fans who will pay as much as $200 a year for the new channel and 20,000 occasional sports viewers who will pay as much as $25 a year for a subscription to it. a) If Winterfell Cable is unable to price discriminate, what price will it charge and how much are its profits? Price Profits= b) If Winterfell Cable is able to price discriminate, how much will it make in profits? Profits= What is the deadweight loss associated with the nondiscriminating pricing policy compared to the price c) discriminating policy? DWL=arrow_forwardFRONT PAGE Pricing Disney+ Disney decided it wanted to provide streaming services directly to customers, rather than renting its library of films and television shows to other streaming services like Netflix. But how successful would a streaming service be? In other words, what did the demand for a "Disney+" streaming service look like? Disney knew that the number of subscribers would depend not just on the attractiveness of the Disney archives, but also on the subscription price. After doing some market research, Disney decided to launch Disney+ at a price of $6.99 a month (or $69.99 per year). When Disney+ was launched on November 12, 2019, 10 million people signed up on the first day-a resounding success! Source: News reports, October-December 2019. Suppose Disney+ changes its monthly subscription price from $7 to $9 per month. Graphically show the impact of this price change in the following markets: a. Popcorn, pizza, and other movie snacksarrow_forwardplease provide me some advantages and disadvantages of short term pricing policiesarrow_forward
- Explain the advantages and drawbacks of using incrementalcost pricing rather than full-cost pricing.arrow_forwardYou are a pricing analyst for QuantCrunch Corporation, a company that sells a statistical software package. To date, you only have one client. A recent internal study reveals that this client’s inverse demand for your software is P=1500-5Q and that it would cost you $1,000 per unit to install and maintain software at this client’s site. What is the profit that results from two-part pricing? (Hint: set the per-unit price for each unit of the software installed and maintained equal to marginal cost; and charge a fixed “licensing fee” that extracts all consumer surplus from the client)arrow_forwardIf your marketing department estimates that the semiannual demand for the highlander is q=150,000. - 1.5 P, what price should you charge in order to maximize revenues from the sales of highlanderarrow_forward
- When the announcement was made in January about the availability of Starlink in Nigeria, which of the following occurred in the market for internet connectivity?arrow_forwardShaughnessy Consulting, LLC currently enjoys a patent on software that estimates economic damages for clients involved in personal injury lawsuits. Demand for my software is QD = 287.5 – 12.5P. Creating the software cost me about $985 in development and coding. I can produce a copy of the software for $11 per unit (constant cost). How many copies of the software should I attempt to sell? At what price should I sell it? How much profit would I make? My patent expires in a year, and I know other economic consultants will produce competing software. What quantity and price will result once competing software emerges? How much consumer surplus will my clients (lawyers) gain once the competitors enter? (For measuring consumer surplus, recall that area of a triangle = ½ * base * height.) How much deadweight loss is created by my patent and monopoly in this software?arrow_forwardSal's satellite company broadcasts TV to subscribers in Los Angeles and New York. The demand functions for each of these two groups are QNY =40-0.2PNY QLA=80-0.5PLA where Q is in thousands of subscriptions per year and P is the subscription price per year. The cost of providing Q units of service is given by C = 1000 + 60Q where Q Suppose Sal can charge only a single price. QNY + QLA %3D What price should he charge, and what quantities will he sell in New York? A. $115.71, 18 В. $130, 14 C. $110, 25 D. $115.71, 22arrow_forward
- Why does Pinterest consider Google to be its largest competitor? Pinterest Pinterest places a premium on mobile platforms when developing new products and services.arrow_forwardHow would customers likely react if a retailer switched its pricing strategy from one to the other?arrow_forward[Suppose] A Cmpany is the sole provider of electricity in the various districts of Dubai. To meet the monthly demand for electricity in these districts, which is given by the inverse demand function: P = 1,200 − 4Q, the company has set up two electric generating facilities: Q1 kilowatts are produced at facility 1 and Q2 kilowatts are produced at facility 2; where Q = Q1 + Q2. The costs of producing electricity at each facility are given by C1(Q1) = 8,000 + 6Q1 C2(Q2) = 6,000 + 3Q2 + 5Q22 What is the MR function? What is the MC function of each facility? What is the MC function of the firm?arrow_forward
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