A) A retailer wants to sell some DVDs to 4 consumers (A, B, C and D). Assume there are only 4 DVDs in total to sell and that the retailer has committed to lowering the prices in period 2. The valuation to the different consumers are as follows: Period 1 Period 2 Benefit to A and B 700 400 Benefit to C and D 400 100 In your hand written solutions, describe the first round price, second round price and profits for the retailer. Show all your calculations. B) Now assume that there are only 2 consumers (A and C). The valuation to the different consumers are as follows: Period 1 Period 2 Benefit to A 700 400 Benefit to C 400 100
A) A retailer wants to sell some DVDs to 4 consumers (A, B, C and D). Assume there are only 4 DVDs in total to sell and that the retailer has committed to lowering the prices in period 2. The valuation to the different consumers are as follows: Period 1 Period 2 Benefit to A and B 700 400 Benefit to C and D 400 100 In your hand written solutions, describe the first round price, second round price and profits for the retailer. Show all your calculations. B) Now assume that there are only 2 consumers (A and C). The valuation to the different consumers are as follows: Period 1 Period 2 Benefit to A 700 400 Benefit to C 400 100
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A) A retailer wants to sell some DVDs to 4 consumers (A, B, C and D). Assume there are only 4 DVDs in total to sell and that the retailer has committed to lowering the prices in period 2. The valuation to the different consumers are as follows:
| Period 1 | Period 2 | |
| Benefit to A and B | 700 | 400 |
| Benefit to C and D | 400 | 100 |
In your hand written solutions, describe the first round
B) Now assume that there are only 2 consumers (A and C). The valuation to the different consumers are as follows:
| Period 1 | Period 2 | |
| Benefit to A | 700 | 400 |
| Benefit to C | 400 | 100 |
In your hand written solutions, describe the first round price, second round price and profits for the retailer. Show all your calculations.
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