MANAGERIAL/ECON+BUS/STR CONNECT ACCESS
9th Edition
ISBN: 2810022149537
Author: Baye
Publisher: MCG
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Chapter 11, Problem 16PAA
To determine
To find: The optimal pricing strategy and reason for its best strategy.
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You 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)
Identify nine common pricing methods.
A golf club’s owner has commissioned a market study that estimates the average customer’s monthly demand curve for playing 18-hole golf game to be
Q=50 – 0.5P,
where Q stands for the number of 18-hole golf game, and P is the green fee. The marginal cost is given by MC=20.
(1) Under two-part pricing strategy, what is the optimal amount of green fee to charge for one round of 18-hole golf game?
(2) Under two-part pricing strategy, what is the optimal amount of membership due?
(3) Under two-part pricing strategy, what is the size of the profit obtained from the average customer?
Chapter 11 Solutions
MANAGERIAL/ECON+BUS/STR CONNECT ACCESS
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