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- You would like to control the total consumption of soft drink up to 100 bottles per year. The current two brands you drink are Pepsi and Coke. The current demand, price, elasticity, and minimum demand for Pepsi and Coke are given in below. In addition, you would like to keep equal or more demand from Pepsi due to brand loyalty. Assuming linear demand curves, what are the best price for Pepsi and Coke that can minimize your total payment? Elasticity Current price Demand Minimum demand Keep Pepsi income > = 60% of total payment Pepsi 2 2 300 20 Coke 1 3.5 220 25Greentech- a high technological pharmaceutical company, has developed a clot-dissolving drug called TPA that will halt a heart attack in progress. TPA saves life, minimizes hospital stays, and reduces damage of the heart itself. It is priced at $ 2,200 per dose. What pricing approach does Greentech appear to be using? Is demand for this drug is likely to be elastic with price? Note: Please answer the question with points and exampleUrgent needed within 30minAssume that you are a loyal customer from Lanuit Coffee and you always buy Americano coffee from Lanuit Coffee with the price USD 10, but then you look the Toast n Bread store bundling package that consists of the various coffee brand: Happy Coffee with Toast n Bread package USD 20. Which one will you choose? Will you still buy coffee from Lanuit Coffee? And as a loyal customer, which one more elastic, Lanuit Coffee or Happy Coffee for you? If you as the management of Lanuit Coffee, what will you do to keep the loyal customer, and how about your opinion with the elasticity of demand in Lanuit Coffee products? Please explain your answer.
- Answer within 45min please Suppose that Andrew’s Hotel will be open for only two days: a peak season day and anoff-peak day. Andrew has two types of costs: room construction costs and guest service costs. Thecost of servicing any guest is 50 dollars. The cost of building a room is 400 dollars, but rooms canbe used for both types of day. Inverse demand for peak days is P = 1000 −Q, and demand foroff-peak is P = 500 −2Q.What prices should Andrew, who is looking to maximize his profits, set, and how many roomsshould he build?Suppose you are the economic adviser ofa company producing three brands of mobile pnones;Nokia 10, Samsung X and iPhone 7. Suppose further that, your company currently sells 120units of iPhone Z at e800 per unit, 150 units of Samsung X at e800 per unit and 200 units ofNokia 10 at e100 per unit, but in a bid to maximize profit, the company's managing directorproposes an increase in price of Samsung X from e800 to e1000 per unit for which quantitydemanded is anticipated to fall from 150 to 100 units; iPhone Z from e800 to e 1200 per unitfor which quantity demanded is anticipated to fall from 120 to 100 units; and Nokia 10 from100 to 200 per unit for which quantity demanded is expected to fall from 200 to 100 unitsUsing the mid-polint formula. compute the price elasticity of demand for each brand.From your answer in i, what is the type and economic interpretatiom of each brand'sii.value of elasticity.List the characteristics of products that haveinelastic demand, and give several examples ofsuch products.
- A6 You are the owner of a local Honda dealership. Unlike other dealerships in the area, you take pride in your “No Haggle” sales policy. Last year, your dealership earned record profits of $2.0 million. In your market, you compete against two other dealers, and the market-level price elasticity of demand for midsized Honda automobiles is -1.8. In each of the last five years, your dealership has sold more midsized automobiles than any other Honda dealership in the nation. This entitled your dealership to an additional 35 percent off the manufacturer’s suggested retail price (MSRP) in each year. Taking this into account, your marginal cost of a midsized automobile is $13,000. What price should you charge for a midsized automobile if you expect to maintain your record sales?Noticing that profits on college text books are very high, the Beast Book Store (BBS), with the help of a venture capitalist, has gone into text book publishing. In its current production range its average total cost is approximately equal to its marginal cost which it estimates to be about $25. It has estimated that price elasticity of demand for its books at current price levels to be about -1.5. The manager of BBS uses mark-up pricing to price the books that it sells using a 150% mark-up (even with this mark-up BBS can still underprice most other book publishers). Assuming that BBS wants to maximize short-term profits on its book sales and initially enjoys a monopoly in the local college textbook production market, is this a good pricing procedure? Harvard and other local colleges soon start publishing companies of their own increasing competition and causing the price elasticity of demand for BBS books to increase to -2.0. Assuming that BBS’s demand curve that generates this -2.0…An analyst for FoodMax estimates that the demand for its "Brand X" potato chips is given by: Inoxd = 12.45 - 3.3 In Px+ 3.9Py+ 1.5 In Ax where Qx and Px are the respective quantity and price of a four-ounce bag of Brand X potato chips, Pyis the price of a six-ounce bag sold by its only competitor, and Axis FoodMax's level of advertising on brand X potato chips. Last year, FoodMax sold 5 million bags of Brand X chips and spent $0.35 million on advertising. Its plant lease is $2.5 million (this annual contract includes utilities) and its depreciation charge for capital equipment was $2.9 million; payments to employees (all of whom earn annual salaries) were $0.9 million. The only other costs associated with manufacturing and distributing Brand X chips are the costs of raw potatoes, peanut oll, and bags; last year FoodMax spent $2.6 million on these items, which were purchased in competitive input markets. Based on this information, what is the profit-maximizing price for a bag of Brand X…
- Jackistheowneroftheonlylocalbarinasmalltown.Hesellswhiskeyin one-ounce glasses. For simplicity, let’s assume it doesn’t cost Jack anything to run his business. There are two customers, Adam and Burt who are twin brothers. Adam’s demand function is yA = 16 – 2p, and Burt’s demand function is yB = 8 – p (price is measured in dollars and quantity is measured by ounces). Jack knows their demand functions, but the problem is that he cannot tell them apart since they look exactly the same to him. To increase his profits, Jack offers the following two options that his customers can choose from: (1) You can pay $T1 up front and drink as much as you want; or (2) Pay $T2 up front and the price per ounce of whiskey will be $p. 1.a If p = 4, what is the maximal T2 that Jack can charge so that Burt is willing to come to the bar? 1.b What is the maximal T1 that Jack can charge so that Adam will choose the first pricing option?6.10. SpokenWord. Your software company has just completed the first version of Spo- kenWord, a voice-activated word processor. As marketing manager, you have to decide on the pricing of the new software. You commissioned a study to determine the poten- tial demand for SpokenWord. From this study, you know that there are essentially two market segments of equal size, professionals and students (one million each). Profes- sionals would be willing to pay up to $400 and students up to $100 for the full version of the software. A substantially scaled-down version of the software would be worth $50 to consumers and worthless to professionals. It is equally costly to sell any version. In fact, other than the initial development costs, production costs are zero. Although you know there are two market segments, you cannot directly identify a consumer as belonging to a specific market segment. (a) What are the optimal prices for each version of the software? Suppose that, instead of the…Q5. Figure 18-9 shows how price is determined for express lanes in a value pricing (HOT lanes) policy. Vo represents Trip cost ($) Co Toll Toll Vo a Demand: low Trip cost the maximum amount of traffic volume that is possible without congestion the minimum amount of traffic volume that is possible without congestion O the maximum amount of traffic volume that would be willing to pay a toll O the minimum toll cost for the most congested periods Demand: high Vehicles
