Exam 14: Advanced Pricing Techniques

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): Use the MR = SMC approach to finding the profit-maximizing point on the demand for Drill Quest's bits.The profit-maximizing number of bits to sell is

A firm is producing two goods X and Y)that are related in consumption.The demand function for X is: In order to maximize profit,the firm

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

A news magazine offers students a discount on the regular subscription rate.The total number of subscriptions is optimal,and,at the current prices,the marginal revenue from the last subscription sold to a student is $6,while the marginal revenue from the last subscription sold to a regular customer is $10.If the magazine sells one more subscription to a regular customer and one less subscription to a student:

A firm sells two goods X and Y)that are related in consumption.The estimated inverse demand and cost functions are: What are the profit-maximizing levels of output for the two goods?

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)?

In order to maximize profit,a firm that sells its output in two markets will allocate total output between the two markets so that:

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.If the bar sells 151 drinks to male customers and 49 drinks to female customers instead,then

Black Diamond Tennis & Golf Club offers golf and tennis memberships to the residents of Black Diamond,Ohio,in which there are two types of families: golf-oriented families and tennis-oriented families.There are 100 golf-oriented families and 100 tennis-oriented families in Black Diamond.Forecasted demand prices for golf and tennis memberships by family type are given below.There is no way to identify family types for pricing purposes,and all costs are fixed so that maximizing total revenue is equivalent to maximizing profit. Demand Prices for Golf and Tennis Memberships If Black Diamond Tennis & Golf Club plans to offer golf and tennis memberships separately,what prices should be charged for each kind of membership if Black Diamond wishes to maximize profit?

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 $550,000.DrillQuest currently produces 690 bits.Statistical estimation of demand for Drill Quest brand bits produces the following linear demand equation where Q is the number of bits demanded and P is the price of bits): Using the cost-plus price,Drill Quest earns profit of approximately)$___________ by selling 690 bits.

firm faces the demand for its product, ,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.

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?

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

Refer to the following: 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): 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.

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 total output should the firm produce?

A firm sells two goods X and Y)that are related in consumption.The estimated demand and cost conditions are: What are the profit-maximizing levels of output for the two goods?

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): Use the MR = SMC approach to finding the profit-maximizing point on the demand for Drill Quest's bits.The maximum possible profit is $___________.

The Hilton Hotel chain serves both business and vacation travelers.Above, and represent the demand and marginal revenue for business travelers,while and are the demand and marginal revenue for vacation travelers.What price should the Hilton charge VACATION travelers?

firm faces the demand for its product, ,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,consumers enjoy $______ of consumer surplus.