Problem 08-16 You are the manager of College Computers, a manufacturer of customized computers that meet the specifications required by the local university. Over 90 percent of your clientele consists of college students. College Computers is not the only firm that builds computers to meet this university's specifications; indeed, it competes with many manufacturers online and through traditional retail outlets. To attract its large student clientele, College Computers runs a weekly ad in the student paper advertising its “free service after the sale" policy in an attempt to differentiate itself from the competition. The weekly demand for computers produced by College Computers is given by Q= 800 – 2P, and its weekly cost of producing computers is CQ) = 1,200 + 2Q². If other firms in the industry sell PCs at $300, what price and quantity of computers should you produce to maximize your firm's profits? Price: $ Quantity: What long-run adjustments should you anticipate? computers Exit by other firms along with decreased profits. Entry by other firms, reducing your profits. Entry by other firms along with increased profits. O Exit by other firms, increasing your profits.

Question: Your marketing department has identified the following customer demographics in the following table. Construct a demand curve and determine the profit maximizing price as well as the expected profit if MC-$1. The number of customers in the target population is 10,000. Analyze the challenges that the marketing firm will be facing to evaluate customer demand. Group Value Frequency Baby boomers $5 20% Generation X $4 10% Generation Y $3 10% Tweeners $2 10% Seniors $2 10% Others $0 40%

A company has established that the relationship between the price for one of its products is approximately p = 88.5 – 0.08D0.75 In addition there is a fixed cost of $45,000 per year and the variable cost to manufacture the product is $45 per unit. What level of demand maximizes the total revenue? Ans. is Blank 1 What level of demand maximizes the total profit for this product? Ans. is Blank 2 Blank 1 Add your answer Blank 2 Add your answer

A firm sells its product to two groups of buyers: daytime buyers and nighttime buyers. There are 50 daytime buyers, all of whom have identical demands given by DD in the figure. There are 50 nighttime buyers, all of whom have identical demands given by DN in the figure. The firm's variable costs are constant (SMC = AVC = $12) and its total fixed cost is $250,000. The marketing director must devise a two-part pricing plan that will maximize the firm's profit. Price and cost ($ per unit) 100 12 0 Do: PD 100 -0.5Q, Multiple Choice Quantity Panel A - One Daytime buyer's demand A* = $1,472 A* = $2,178 A* = $3,872 SMC = AVC A* = $4,356 200 A* = $7,744 100 Assuming both daytime and nighttime markets are served, the optimal fixed access charge (4*) is 0 DN: PN 100 - QN SMC=AVC 100 Quantity Panel B - One Nighttime buyer's demand

Two dermatologist practices want to merge. The price elasticity of demand for dermatology services is -0.35. Firm 1 has a volume of 7,500, fixed costs of $70,000, marginal costs of $20, and a market share of 8%. Firm 2 has a volume of 15,600, fixed costs of $65,000, marginal costs of $20, and a market share of 12 percent. The merged firm will have a volume of 21,500, fixed costs of $95,000, marginal costs of $20, and a market share of 20%. What are the total costs, prices, revenues, and profits for each firm and for the merged firm, respectively?

Based on Zangwill (1992). Murray Manufacturing runs a day shift and a night shift. Regardless of the number of units produced, the only production cost during a shift is a setup cost. It costs $8000 to run the day shift and $4500 to run the night shift. Demand for the next two days is as follows: day 1, 2000; night 1, 3000; day 2, 2000; night 2, 3000. It costs $1 per unit to hold a unit in inventory for a shift. a. Determine a production schedule that minimizes the sum of setup and inventory costs. All demand must be met on time. (Note: Not all shifts have to be run.) b. After listening to a seminar on the virtues of the Japanese theory of production, Murray has cut the setup cost of its day shift to $1000 per shift and the setup cost of its night shift to $3500 per shift. Now determine a production schedule that minimizes the sum of setup and inventory costs. All demand must be met on time. Show that the decrease in setup costs has actually raised the average inventory level. Is this…

Many restaurants don't take reservations. You simply arrive and wait your turn. If you arrive at 7:30 in the evening, you have at least an hour wait. Notwithstanding that fact, a few people arrive, speak quietly with the maitre d’, hand him some money, and are promptly seated. At some restaurants that do take reservations, there is a month wait for a Saturday evening, three weeks for a Friday evening, two weeks for Tuesday through Thursday, and virtually no wait for Sunday or Monday evening. How do you explain these events using demand and supply?

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Suppose you own a tax preparation services company, with fixed costs of $3,000/month and marginal costs of $25/appt.If the price is $60/appt, 500 appointments would be sold. If the price is $50/appt, 760appointments would be sold. a.)Use these figures to calculate the price elasticity of demand for your services. b.)Calculate the monthly profits and profit margins (profit/revenue) associated with the price of $60/appt and $50/appt. c.)Given these calculations, what price should you charge for your services, $50/apptor $60/appt? Explain