Suppose the firm has the following information on the willingness and ability of senior citizens to pay for the all-you-can-eat buffet. Market for All-You-Can-Eat c. How many meals will the restaurant sell to senior citizens if it chargesthe profit - maximizing price determined in part a? meals d. Suppose the firm has the ability to price discriminate.What is the profit-maximizing level of output and price? The firm should charge senior citizens $ and will sell meals. e.What is the profit generated from the sale of senior citizen meals? What will be the total profit for the firm, assuming thefirm can price discriminate between average consumers and senior citizens? $ is the profit generated from seniorcitizens. is the total profit generated from all sales.

2. Calculate the total revenue and total cost.Since the profit-maximizing quantity is 0, the total…

Answered: Suppose the firm has the following…

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter6: Simple Pricing

Section: Chapter Questions

Problem 7MC

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14. The only DVD rental club available to you charges $4 per movie per day. If your demand curve for movie rentals is given by P = 20 – 2Q, where P is the rental price ($/day) and Q is the quantity demanded (movies per year), what is the annual maximum fee you would be willing to pay to join the club?
Marcella owns a sandwich shop. She decides to charge different prices to groups of customers. She targets one group of potential customers by giving them a discount coupon and the other group gets no coupons. Which of the following would be a characteristic of the group that does NOT receive the discount coupon? They _____ than the potential customers who receive coupons. Select one: a. have a lower reservation price b. have a more elastic demand c. receive equal marginal benefit from the product d. have a less elastic demand
In the world of French high cuisine, a three-star rating from the Michelin Red Guide is a widely accepted indicator of gastronomic excellence. French consumers consider Gault Milleau, another restaurant guide, not as authoritative as the Michelin guide because Gault Milleau, unlike Michelin, accepts advertising and its critics accept free meals. Why are guides' ratings important to restaurant owners and chefs? Discuss the effect of a restaurant's rating on the demand for the restaurant. a. A) It provides information to consumers regarding the restaurant's quality, thus, reducing the moral hazard problem. A high rating can increase demand B)It provides information to consumers regarding the restaurant's quality, thus, reducing the adverse selection problem. A high rating can increase demand. b. Why do advertising and free meals taint the credibility of Gault Milleau? Discuss the moral hazard problem of Gault Milleau's ratings. A) The critics may be biased toward restaurants that give…
Explain the methods used toallocate the integratedmarketing communications(IMC) budget.
33. Rodrigo gets a $1.00 discount by buying Cheerios on the end of the aisle that have a store coupon. Olivia buys the same sized Cheerios at the regular price in the cereal section. Is this price discrimination? True False
List and explain the three kinds of pricing methods. Give an advantage and a disadvantage for each method.
1. A manufacturer estimates that D(p)=3000e0.05p units of a particular good will be sold at market price of p cedis per unit. Determine the market price that will result in marginal revenue of zero. 2. A manufacturer estimates that q = 800/30 – p units of a commodity are demanded when cedis per unit are charged. a. Express the price elasticity of demand as function of p . b. Calculate the price elasticity of demand when p=10. Interpret the result. c. Find the price at which the price elasticity of demand is unit-elastic. 3. An auto maker estimates that when q units of its saloon cars are sold in a day, its profit in millions of cedis is modelled as P(q) =100+25In 20 Find the 2 number of cars that should be produced and sold to maximise profit.
George has been selling 7,000 T-shirts per month for $7.00. When he increased the price to $9.00, he sold only 6,000 T-shirts. Which of the following best approximates the price elasticity of demand? -0.6769 -0.6154 -0.3077 -0.5538 Suppose George's marginal cost is $4 per shirt. Before the price change, George's initial price markup over marginal cost was approximately . George's desired markup is . Since George's initial markup, or actual margin, was than his desired margin, raising the price was
Suppose High-Tech Software sells two products-a word-processing package and a spreadsheet package. Suppose that the business community values the word-processing package at $100 per unit and the spreadsheet package at $250 per unit while the university community values the word-processing package at $125 and the spreadsheet at $200. (Assume that the marginal cost of each unit is zero.) a. What are the profit-maximizing price that High-Tech should charge if they sell each product separately and what is the total price of the two goods? b. If High-Tech is able to engage in tying, what is the profit-maximizing price for the two products as a bundle? c. Should this be legal?
Suppose you were asked to manage a golf course that was currently charging a uniform price. Would you suggest that the course continue with this price plan or switch to a two-part pricing plan? Explain your decision and how you would choose the optimal price.
Refer to Example 10.3 - 'Markup Pricing: Supermarkets to Designer Jeans' a. Why do small convenience stores which are often open 24-7 typically charge higher prices than supermarkets? b. Why are designer label jeans typically more expensive than 'mass-market' jeans?
What is price discrimination? Explain how the theories of elasticity, if used, can help suppliers make decisions on product prices.

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