To Describe: The firm that blinked first, under the situation, when S’s PlayStation 2(PS2) dominated game console market from 1997 − 2003 with 123 million sold out units, after which 62 percent of market was with N’s Wii. In order to achieve this spectacular growth the prices has fallen continuously from launch price of
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Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
- 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 25arrow_forwardYou are the manager of a firm that receives revenues of $20,000 per year from product X and $90,000 per year from product Y. The own price elasticity of demand for product X is -3, and the cross-price elasticity of demand between product Yand X is -1.3. 1 percent? How much will your firm's total revenues (revenues from both products) change if you increase the price of good X by Instructions: Enter your response rounded to the nearest dollar. If you are entering a negative number, be sure to use a (-) sign.arrow_forwardQUESTION 7.1 You own a miniature golf course on the boardwalk in Ocean City, New Jersey. Right next to you on the boardwalk is another miniature golf course. Your golf course has a dinosaur theme. Your competitor's course is newer and has several impressive waterfalls and original hole designs that are attractive to your avid miniature golf fan. From past experience you have determined that the own-price elasticity of demand for your golf course is -1.5. You also know that the cross-price elasticity of demand for your course with respect to your competitor's price is +0.8. You suspect that your competitor's own-price elasticity of demand is -1.5 as well, but that the cross-price elasticity of demand for his course relative to your prices is only +0.4 due to the more modern design features. Currently you charge $5.00 for a round of miniature golf and have 2,000 customers in a typical week. Your competitor charges $7.50 for a round of golf and currently has 3,000 customers in a typical…arrow_forward
- Viking InterWorks is one of many manufacturers that supplies memory products to original equipment manufacturers (OEMs) of desktop systems. The CEO recently read van article in a trade publication that reported the projected demand for desktop systems to be Qddesktop = 1,600 −2Pdesktop + .6M (in millions of units), where Pdesktop is the price of a desktop system and M is consumer income. The same article reported that the incomes of the desktop systems’ primary consumer demographic would increase 4.2 percent this year to $61,300 and that the selling price of a desktop would decrease to $980, both of which the CEO viewed favorably for Viking. In a related article, the CEO read that the upcoming year’s projected demand for 512 MB desktop memory modules is Qdmemory = 11,200 − 100Pmemory − 2Pdesktop (in thousands of units), where Pmemory is the market price for a 512 MB memory module and Pdesktop is the selling price of a desktop system. The…arrow_forwardYou are the manager of a firm that receive revenue of Rs.30,000 per year from product X and Rs. 70,000 per year from product Y. The own price elasticity of demand for product X is -2.5 and the cross price elasticity of demand between product Y and X is 1.1. How much will you firm’s total revenue (revenues from both products) change if you increase the price of good X by 1 present?arrow_forwardSuppose a firm produces two products, X and Y. The firm earns revenues from X equal to $70,000 and revenues from Y equal to $60,000. The own price elasticity of demand for Xis-1.5 and the cross-price elasticity of demand between X and Y is-0.80, If the firm decreases the price of product X by 1%, the change in total revenues will be $arrow_forward
- ONLY ANSWER QUESTION #2 1. Online the timing and tailoring of prices to specific models of products is the key to successful pricing in online markets. And “Thanks to the ready availability of data in online markets, a pricing manager can easily approximate the elasticity of demands for the different products it sells online.”Assuming a 10 percent decrease in price increases sales by 28 percent, calculate the price elasticity of demand? If the wholesale price of the online product is $50 and sells at a price comparison site that charges $.50 per click and boasts a conversion rate of 5 percent (an average of 20 clicks are needed to generate a sale). What price should you charge for the product? What is the optimal markup on cost? 2. The authors assert that price sensitivity is affected by (1) product life cycles, and (2) numbers of competitors. In fact, “when the number of competing sellers doubles, a firm’s elasticity of demand is expected to double (and you should be able to verify…arrow_forwardFemi's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Femi Initially produced five trucks, but then decided to increase production to six trucks. The following graph gives the demand curve faced by Femi's HookNLadder. As the graph shows, in order to sell the additional fire truck; Femi must lower the price from $160,000 to $120,000 per truck. Notice that Femi gains revenue from the sale of the additional engine, but at the same time, he loses revenue from the initial five engines because they are all sold at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial five engines by selling at $120,000 rather than $160,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $120,000. PRICE (Thousands of dollars per fire engine) 8 8 2 2 2 2 8 2 2 2 20 220 200 180 160 140 120 100 60 40 0 2 3…arrow_forwardGreentech- 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 30minarrow_forward
- Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. PRICE (Dollars per room) 500 450 400 350 300 250 200 150 100 50 0 0 Demand 50 100 150 200 250 300 350 400 450 500 QUANTITY (Hotel rooms) Graph Input Tool Market for Oceans's Hotel Rooms Price (Dollars per room) Quantity Demanded (Hotel rooms per night) Demand Factors Average Income (Thousands of dollars) Airfare from PIT to ACY (Dollars per roundtrip) Room Rate at Meadows (Dollars per night) 400 100 50 250 200 ?arrow_forwardSuppose that the Blinn College Deli is currently selling 500 chef salads per day when the price is $5. Suppose that the own-price elasticity of demand for chef salads is -0.8. As the Deli manager you decide to lower the price by $0.50. Which of the following is most likely to happen? Chef salad sales will fall by approximately 8% and total revenue will be lower. Chef salad sales will rise by approximately 8% and total revenue will be higher. Chef salad sales will fall by approximately 8% and total revenue will be higher. Chef salad sales will rise by approximately 8% and total revenue will be lower.arrow_forwardIn the Current Events article, it mentioned how DoorDash is trying to increase its amount of subscription users (DashPass). The price for DashPass is $10 per month. Assume the demand for regular DoorDash deliveries (non-subscription) is: P = 20 - 0.04Q where P is the delivery fee on the order. Assume the goal of the company is to maximize combined revenue from both regular deliveries (delivery fees) and the subscription fees (DashPass). A different manager suggest pricing the deliveries at $14 per delivery. Which of the following actions would you select as a manager? Group of answer choices Advise that it should be a $10 fee per delivery Advise that the$14 delivery fee is too low Advise that it should be a $20 fee per delivery Agree that $14 per delivery is optimal in this situationarrow_forward
- Managerial Economics: Applications, Strategies an...EconomicsISBN:9781305506381Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. HarrisPublisher:Cengage Learning