EP ECONOMICS,AP EDITION-CONNECT ACCESS
20th Edition
ISBN: 9780021403455
Author: McConnell
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 19, Problem 12DQ
To determine
Difference in the optimum quantity.
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Forty thousand potential customersof a cable TV franchise are each willing to pay $11/month for HBO and $11/month for Cinemax. Twenty thousand potential customers are willing to pay $20/month for HBO and only $5/month for Cinemax. Assume costs are zero.
If the franchise sells the two services in a bundle, it should charge1: $312: $253: $224: $205: $18
Consumer Valuations for Two Versions of the Honda Pilot
Consumer Type
Honda Pilot 4WD LX
Honda Pilot 4WD Touring
Highly price-sensitive
$32,000
$37,000
Less price-sensitive
$33,500
$44,000
Honda plans on pricing the 4WD LX at $30,000 and the Touring model at $40,000.
Is this pricing structure incentive compatible? How much would Honda get from
selling to two customers-one of each type?
O Yes; $70,000.
O No; $70,000.
O Yes; $76,000.
O There's not enough information to be able to determine the answer.
O No; $60,000.
Suppose that the Touring model costs just $1000 more to produce than the 4WD
LX. How much can Honda raise the price on the Touring model (keeping the price on
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O $599.99.
O $999.99.
O $1499.99.
O $499.99.
O $0.
Consider a market for used computer printers, where
buyers value good ones at $1,000 and bad ones at $760.
Sellers value good ones at $910 and bad printers at $690.
Sellers can attach a warranty at cost of $20 per month for
good ones and $45 for bad ones. What is the minimum
number of month necessary in order for the seller of good
printers to be able to signal her type?
O 5
1 9
O 11
Chapter 19 Solutions
EP ECONOMICS,AP EDITION-CONNECT ACCESS
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