Managerial Economics: A Problem Solving Approach
5th Edition
ISBN: 9781337106665
Author: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher: Cengage Learning
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Chapter 14, Problem 14.4IP
To determine
The pricing strategy to yield the greatest revenue.
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A manufacturer of microwaves has discovered that male shoppers have little value for microwaves and attribute almost no extra value to an auto-defrost feature. Female shoppers generally value microwaves more than men do and attribute greater value to the auto-defrost feature. There is little additional cost to incorporating an auto-defrost feature. Since men and women cannot be charged different prices for the same product, the manufacturer is considering introducing two different models. The manufacturer has determined that men value a simple microwave at $63 and one with auto-defrost at $77, while women value a simple microwave at $77 and one with auto-defrost at $140.
Suppose the manufacturer is considering three pricing strategies:
1.
Market a single microwave, with auto-defrost, at $77, to both men and women.
2.
Market a single microwave, with auto-defrost, at $140, to only women.
3.
Market a simple microwave to men, at $63. Market a microwave, with auto-defrost, to women…
A manufacturer of microwaves has discovered that male shoppers have little value for microwaves and attribute almost no extra value to an auto-defrost feature. Female shoppers generally value microwaves more than men do and attribute greater value to the auto-defrost feature. There is little additional cost to incorporating an auto-defrost feature. Since men and women cannot be charged different prices for the same product, the manufacturer is considering introducing two different models. The manufacturer has determined that men value a simple microwave at $65 and one with auto-defrost at $75, while women value a simple microwave at $75 and one with auto-defrost at $140.
Suppose the manufacturer is considering three pricing strategies:
1. Market a single microwave, with auto-defrost, at $75, to both men and women.
2. Market a single microwave, with auto-defrost, at $140, to only women.
3. Market a simple microwave to men, at $65. Market a microwave, with auto-defrost, to women at $129.…
Chapter 14 Solutions
Managerial Economics: A Problem Solving Approach
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