Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN: 9781305506381
Author: James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 2, Problem 1.2CE
To determine
The effectiveness of revenue management techniques of charging differential prices based on
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Based on the best available econometric estimates, the market elasticity of demand for your firm’s product is –2. The marginal cost of producing the product is constant at $150, while average total cost at current production levels is $225.Determine your optimal per unit price if:Instructions: Enter your responses rounded to two decimal places.a. You are a monopolist.$ b. You compete against one other firm in a Cournot oligopoly.$ c. You compete against 19 other firms in a Cournot oligopoly.$
Based on the best available econometric estimates, the market elasticity of demand for your firm’s product is −2.5. The marginal cost of producing the product is constant at $225, while average total cost at current production levels is $300.Determine your optimal per unit price if:Instructions: Enter your responses rounded to two decimal places.a. you are a monopolist.
$
b. you compete against one other firm in a Cournot oligopoly.
$
c. you compete against 19 other firms in a Cournot oligopoly.
$
Note:-
Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
Answer completely.
You will get up vote for sure.
Sort the following products into those priced with two-part tariffs, user charges only, or lump-sum access fees only: pay-per-view movies on cable TV, pay phones, Netflix, iTunes, country club membership, soda from vending machines, laundromats, cell phones, season ticket holders with seat rights.
Chapter 2 Solutions
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
Knowledge Booster
Similar questions
- If the price match policy is a good idea, how widely should it be advertised? Explain. You woke up this morning to a troubling advertisement on TV: A+ Rental Cars' local competitor is discounting their economy rentals. After doing a little digging, you discover that your competitor has launched an aggressive advertising campaign, reducing the price on their economy line from $32.99 to $24.99. Based on your knowledge of previous pricing practices, you expect a similar price reduction across all vehicle types.arrow_forwardIf clients in an industry have homogeneous price-quality choices, a company with higher than average industry unit costs will always have lower profit margins than a competitor with lower than average industry unit costs 1. True B. False C. To answer this question, more information is needed Why ?arrow_forwardBased on the best available econometric estimates, the market elasticity of demand for your firm’s product is -1.5. The marginal cost of producing the product is constant at $150, while average total cost at current production levels is $215.Determine your optimal per unit price if:Instruction: Enter your responses rounded to two decimal places.a. You are a monopolist.$ b. You compete against one other firm in a Cournot oligopoly.$ c. You compete against 19 other firms in a Cournot oligopoly.arrow_forward
- EasyTax markets both a deluxe and a standard version of its software. The deluxe version contains additional features that are likely to appeal to sophisticated users. The marginal costs of producing and distributing the two versions are virtually equal, and equal to zero. The market is equally divided into two types of users, sophisticated and unsophisticated (and assume one user of each type). The maximum willingness to pay for both types of users for the standard and deluxe versions are given in the following table: Standard Deluxe Unsophisticated 20 20 Sophisticated 35 100 (a) Assuming that the company producing EasyTax can distinguish between sophisticated and unsophisticated users (because, for instance, the sophisticated users are registered accountants), what are the optimal prices to be charged to each category of users? What is the company’s profit? (b) Assume now that the company cannot distinguish between the two types of user.…arrow_forwardBased on the best available econometric estimates, the market elasticity of demand for your firm’s product is −3. The marginal cost of producing the product is constant at $100, while average total cost at current production levels is $175.Determine your optimal per unit price if:Instructions: Enter your responses rounded to two decimal places.a. you are a monopolist.arrow_forwardList the factors that influence pricing decisions,and explain break-even analysisarrow_forward
- According to International Data Corporation (IDC), the number of worldwide smartphone owners will soon exceed 1.5 billion. That number is expected to grow at nearly 10 percent per year for the next five years. While the actual cost of a smartphone is about $300, wireless carriers in some countries offer their customers a “free” smartphone with a two-year wireless service agreement. Is this pricing strategy rational? Explainarrow_forwardMARKET SEGMENTATION: Type III Discrimination: Price per customer segmentA company has differentiated its customers into 2 segments between which arbitrage is not possible, arriving at following result: Q1 = 200 - P and Q2 = 180 - 1.5 P. Its MC is constant and equal to 70. Commercial Strategy Manager wants to know:(a) If it is convenient for it to apply type III price discrimination, compared to that which would be obtained with the application of a single price for all units, in terms of extraordinary profit.b) If it applies type III price discrimination, what is market power it has in each segment.c) What is price elasticity of demand in each segment, at respective break-even points.arrow_forwardReview the following hypothetical scenario and answer the following question: As you are aware, we are continuing to lose customers of our residential VoIP telephone service. According to our recent marketing research report on the topic, many of our customers are dropping due to the expense of maintaining home phone service while also having wireless plans. I would like your team to consider whether we can take advantage of selective discounting to maintain higher retention. In practice, when customers call to cancel their service, we would offer them a significant discount (25 to 30 percent) off their current rate in order to retain their business. Customers would need to agree to maintain their service for at least three months in order to get the discounted price. Please put together a short response that states whether you think this plan would increase our economic profits, and whether there are any risks that we would lose money due to this plan.arrow_forward
- Based on the best available econometric estimates, the market elasticity of demand for your firm's product is -2. The marginal cost of producing the product is constant at $150, while average total cost at current production levels is $225. Determine your optimal per unit price if: a. you are a monopolist b. you compete against one other firm in a Cournot oligopoly c. you compete against 19 other firms in a Cournot oligopolyarrow_forwardYour pharmaceutical firm is seeking to open up new international markets by partnering with various local distributors. The different distributors within a country are stronger with different market segments (hospitals, retail pharmacies, etc.) but also have substantial overlap. In Egypt, you calculate that the annual value created by one distributor is $120 million per year, but would be $160 million if two distributors carried your product line. Assuming a nonstrategic view of bargaining, you would expect to capture $__________ million of this deal. (Hint: The two distributors are independent of each other; therefore, you conduct separate negotiations with each.) Argentina also has two distributors that add value equivalent to the value added by the two distributors in Egypt, but both are run by the government. Assuming a nonstrategic view of bargaining, you would expect to capture $__________ million of this deal. In Argentina, if you do not reach an…arrow_forwardLalaFast 21 is a major carrier based in the Philippines and has made a strategy of cutting fares drastically on certain routes with large effects on traffic in those markets. For example, on the Baguio-Cubao route the entry of LalaFast into the market caused average fares to fall by 48 per cent and increased market revenue from P21,327,008 to P47,064,782 annually. On the Tuguegarao-Caloocan route, however, the average fare cut in the market when LalaFaST entered was 70 per cent and market revenue fell from an annual P66,201,553 to P33,101,514.Questions1. Calculate the PEDs for the Baguio-Cubao route and Tuguegarao-Caloocan route.2. Explain why the above market elasticities might not apply specifically to Lalafast 21.3. If LalaFast 21 does experience a highly elastic demand on the Baguio-Cubao route, what is the profit implication of this?4. Explain why the fare reduction on the Tuguegarao-Caloocan route a profitable strategy for LalaFast may still be.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial Economics: Applications, Strategies an...EconomicsISBN:9781305506381Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. HarrisPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics: Applications, Strategies an...
Economics
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning