Exam 10: Bundling and Intrafirm Pricing

The Two Stage Photo Company has a division for each stage of photo processing.There is no external market for the first stage's output.For a fixed quantity of photo processing,the transfer price should depend on:

The reservation prices,in dollars,for three classes of demanders (A,B,and C)for two restaurants (1 and 2)are given in the following table.What is the maximum revenue that can be generated by setting a bundled price for the two restaurants?

If a firm uses optimal transfer pricing between production division A and marketing division B,and a competitive external market for the output of division A exists,then production division A will surely:

When a firm requires a customer to buy additional products in order to buy one of its products,this is known as a(n):

The reservation prices,in dollars,for three classes of demanders (A,B,and C)for two restaurants (1 and 2)are given in the following table.What is the maximum revenue that can be generated by setting a separate price for each restaurant?

The reservation prices,in dollars,for three classes of demanders (A,B,and C)for three restaurants (1,2,and 3)are given in the following table.What is the maximum revenue that can be generated by setting a bundled price for the three restaurants?

The reservation prices,in dollars,for three classes of demanders (A,B,and C)for three restaurants (1,2,and 3)are given in the following table.What is the maximum revenue that can be generated by setting a separate price for each of the three restaurants?

If a firm has a marketing division and a production division with increasing costs,and a competitive external market for the production division's output exists,then the marketing division should always buy:

Play It Again Sam is a producer of high-end CD burners.It requires customers to purchase high-quality blank CDs from it in order to maintain warranty agreements.This is an example of a:

Transfer prices are needed when:

The reservation prices,in dollars,for three classes of demanders (A,B,and C)for three restaurants (1,2,and 3)are given in the following table.What is the maximum revenue that can be generated by setting a separate price for each of the three restaurants?

The XYZ Steel Company produces its own coal for use in its production facility.The demand for steel is given by P_s = 500 - 2Q_s and the total cost of producing steel is given by TC_s = 175Q_s,where Q_s is tons of steel per week.The price of coal in a perfectly competitive market outside the firm is $250 per ton,and the total cost of producing coal is given by TC_c = 40 + 5Q_c²,where Q_c is tons of coal per week.How much coal should the XYZ Company produce?

If Chip and Cathy have different valuations on dancing and dinner as in the following table,what is the maximum profit Sammy can extract from Chip and Cathy for an evening's entertainment at Sammy's dinner theater if Sammy's marginal cost is $25 for dinner and $5 for dancing per person?

The transfer price of an upstream product should always equal the market price when:

The XYZ Steel Company produces its own coal for use in its production facility.The demand for steel is given by P_s = 500 - 2Q_s and the total cost of producing steel is given by TC_s = 175Q_s,where Q_s is tons of steel per week.The price of coal in a perfectly competitive market outside the firm is $250 per ton,and the total cost of producing coal is given by TC_c = 40 + 5Q_c²,where Q_c is tons of coal per week.How much steel should the XYZ Company produce?

The XYZ Steel Company produces its own coal for use in its production facility.The demand for steel is given by P_s = 500 - 2Q_s and the total cost of producing steel is given by TC_s = 175Q_s,where Q_s is tons of steel per week.The price of coal in a perfectly competitive market outside the firm is $250 per ton,and the total cost of producing coal is given by TC_c = 40 + 5Q_c²,where Q_c is tons of coal per week.How much coal will XYZ sell outside the firm?

A firm has a division that produces chemical Y,whose average total costs are ATC = 50 + 2Q (where Q is the quantity of Y),and a marketing division that adds its own average total costs of ATC = 20 + 3Q.There is no external market price of Y.The transfer price of Y should be:

The reservation prices,in dollars,for three classes of demanders (A,B,and C)for two restaurants (1 and 2)are given in the following table.What is the maximum revenue that can be generated by setting a separate price for each restaurant?

There are 12,000 fans attending a basketball tournament featuring three regional powerhouses in Charlotte,North Carolina.There are 4,000 of each of three types of fans,identified by the school for which they cheer.The fans value a ticket to see a game according to which teams are competing as shown in the following table.The stadium holds 12,000,and the marginal cost of seating another viewer is zero.What is the change in the maximum profits that organizers can earn for the tourney if they sell the three games as a package instead of as individual games?

Tying can sometimes be justified as helping consumers by: