MANAGERIAL/ECON+BUS/STR CONNECT ACCESS
9th Edition
ISBN: 2810022149537
Author: Baye
Publisher: MCG
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Chapter 12, Problem 17PAA
To determine
To know: The impact on strategies on sales volume.
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Seven years ago, you started a cross-town delivery service. You have two types of deliveryservices. You have a small parcel service for anything that is flat and measures less than 11x17. You have a package service using a 100 lb capacity bike trailer for anything weighting up to 10lbs. Initially, you charged the same price for each service, but since the beginning of the Covid19 pandemic you have seen an increased in the demand for your package service. The demand for the package services seems to be more inelastic than the demand for parcels. You are now wondering if you should charge different prices for the parcel and package service or should you segment the market and charge two different prices?
Complete the tables below and determine the best price strategy: price the services differently in each segment; or continue the one price policy?
Combined Parcels & PackagesPrice Parcels and Packages TR MR TC MC MR-MC…
Seven years ago, you started a cross-town delivery service. You have two types of deliveryservices. You have a small parcel service for anything that is flat and measures less than 11x17. You have a package service using a 100 lb capacity bike trailer for anything weighting up to 10lbs. Initially, you charged the same price for each service, but since the beginning of the Covid19 pandemic you have seen an increased in the demand for your package service. The demand for the package services seems to be more inelastic than the demand for parcels. You are now wondering if you should charge different prices for the parcel and package service or should you segment the market and charge two different prices?
Complete the tables below and determine the best price strategy: price the services differently in each segment; or continue the one price policy?
The Parcels Market
Price Parcels TR MR TC MC MR-MC…
Two dermatologist practices want to merge. The price elasticity of demand for dermatology services is -0.35. Firm 1 has a volume of 7,500, fixed costs of $70,000, marginal costs of $20, and a market share of 8%. Firm 2 has a volume of 15,600, fixed costs of $65,000, marginal costs of $20, and a market share of 12 percent. The merged firm will have a volume of 21,500, fixed costs of $95,000, marginal costs of $20, and a market share of 20%. What are the total costs, prices, revenues, and profits for each firm and for the merged firm, respectively?
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