Exam 14: Advanced Pricing Techniques

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 D_D in the figure below.There are 50 nighttime buyers,all of whom have identical demands given by D_N in the figure below.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. How much profit will the firm earn by charging the optimal access charge and optimal access fee (remember that there are 50 daytime and 50 nighttime buyers)?

A firm faces the demand for its product, $P = 100 - 0.5 Q$ ,as shown in the figure below.It produces under conditions of constant costs in the long run,and LMC = LAC = $12 per unit. If the firm must set a uniform price for the good,what price will it set to maximize its profit in the long run?

Drill Quest,Inc.manufactures drill bits for the oil industry.Drill Quest uses cost-plus pricing to set the price of its bits.Currently Drill Quest applies a 50 percent markup on average total cost.Average variable cost of producing bits is constant and equal to $6,000 per bit.Total fixed cost at Drill Quest is $550,000.DrillQuest currently produces 690 bits.Statistical estimation of demand for Drill Quest brand bits produces the following linear demand equation (where Q is the number of bits demanded and P is the price of bits): $Q = 1,200 - 0.05 P$ Use the MR = SMC approach to finding the profit-maximizing point on the demand for Drill Quest's bits.The profit-maximizing price to charge is $___________ per bit.

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 D_D in the figure below.There are 50 nighttime buyers,all of whom have identical demands given by D_N in the figure below.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. If a firm is selling a product in two markets,A and B,and the marginal revenue in A is $25 and the marginal revenue in B is $20,the firm should

In order to maximize profit,a firm that produces two goods that are related in consumption should chose the levels of output at which:

A firm sells two goods (X and Y)that are related in consumption.The estimated inverse demand and cost functions are: =105-0.5-0.75 =120--0.5 M=10+0.25 M=16+0.5 What are the profit-maximizing levels of output for the two goods?

A firm sells two goods (X and Y)that are related in consumption.The estimated demand and cost conditions are: =20-0.1-0.05 =70-0.3-0.1 M=1+0.1 M=2+0.25 What are the profit-maximizing levels of output for the two goods?

The WildTimes Bar offers female patrons a lower price for a drink than male patrons.The bar will maximize profit by selling a total of 200 drinks per night.At the current prices,male customers buy 150 drinks,while female customers buy 50 drinks.The marginal revenue from the last drink sold to a male customer is $1.50,while the marginal revenue from the last drink sold to a female customer is $0.50.The bar

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 D_D in the figure below.There are 50 nighttime buyers,all of whom have identical demands given by D_N in the figure below.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. To maximize profit a price discriminating firm should

To successfully practice price discrimination

A firm faces the demand for its product, $P = 100 - 0.5 Q$ ,as shown in the figure below.It produces under conditions of constant costs in the long run,and LMC = LAC = $12 per unit. Under uniform pricing,the firm loses sales on _______ units that could be profitably sold if buyers paid their demand prices instead of facing the uniform price.

Gus has 20 acres of land in cultivation and is currently planting both soybeans and peanuts.The last acre planted in soybeans yielded 20 bushels,and the last bushel of soybeans added $0.50 to Gus's total revenue.The last acre planted in peanuts yielded 10 bushels and the last bushel of peanuts added $1 to Gus's total revenue.Gus:

A firm sells two goods (X and Y)that are related in consumption.The estimated demand and cost conditions are: =20-0.1-0.05 =70-0.3-0.1 M=1+0.1 M=2+0.25 What are the profit-maximizing prices for the two goods?

Refer to the following: =666-0.5-2 =484.5-1.5-0.25 M=20+2 M=4+ What are the profit-maximizing levels of output for the two goods?

The following graph shows the demands and marginal revenue in two markets,1 and 2,for a price discriminating firm along with total marginal revenue,MR_T,and marginal cost. What price should the firm charge in each market?

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 D_D in the figure below.There are 50 nighttime buyers,all of whom have identical demands given by D_N in the figure below.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. Assuming the firm will serve both daytime and nighttime buyers,what is the MC_f function?

Drill Quest,Inc.manufactures drill bits for the oil industry.Drill Quest uses cost-plus pricing to set the price of its bits.Currently Drill Quest applies a 50 percent markup on average total cost.Average variable cost of producing bits is constant and equal to $6,000 per bit.Total fixed cost at Drill Quest is $550,000.DrillQuest currently produces 690 bits.Statistical estimation of demand for Drill Quest brand bits produces the following linear demand equation (where Q is the number of bits demanded and P is the price of bits): $Q = 1,200 - 0.05 P$ Use the MR = SMC approach to finding the profit-maximizing point on the demand for Drill Quest's bits.The maximum possible profit is $___________.

Drill Quest,Inc.manufactures drill bits for the oil industry.Drill Quest uses cost-plus pricing to set the price of its bits.Currently Drill Quest applies a 50 percent markup on average total cost.Average variable cost of producing bits is constant and equal to $6,000 per bit.Total fixed cost at Drill Quest is $550,000.DrillQuest currently produces 690 bits.Statistical estimation of demand for Drill Quest brand bits produces the following linear demand equation (where Q is the number of bits demanded and P is the price of bits): $Q = 1,200 - 0.05 P$ Using the cost-plus price,Drill Quest earns profit of (approximately)$___________ by selling 690 bits.

A firm sells two goods (X and Y)that are related in consumption.The estimated demand and cost conditions are: =20-0.1-0.05 =70-0.3-0.1 M=1+0.1 M=2+0.25 Goods X and Y are

Drill Quest,Inc.manufactures drill bits for the oil industry.Drill Quest uses cost-plus pricing to set the price of its bits.Currently Drill Quest applies a 50 percent markup on average total cost.Average variable cost of producing bits is constant and equal to $6,000 per bit.Total fixed cost at Drill Quest is $550,000.DrillQuest currently produces 690 bits.Statistical estimation of demand for Drill Quest brand bits produces the following linear demand equation (where Q is the number of bits demanded and P is the price of bits): $Q = 1,200 - 0.05 P$ If Drill Quest wishes to use cost-plus pricing,it can maximize profit by applying a markup of _____ percent on __________.