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. Suppose the marketing director ignores the nighttime market and wishes to extract all consumer surplus from the daytime buyers.By setting the optimal access charge and user fee,the firm will earn $_________ of profit on each one of the 50 daytime buyers.

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.In order to maximize profit,the magazine should

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:

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. How should the firm allocate sales between the two markets?

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 both daytime and nighttime markets are served,the optimal per unit usage fee f*)is

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 How much total revenue can be generated each month under a pricing plan where separate golf and tennis memberships are offered?

A drugstore offers a discount on prescriptions to senior citizens.This suggests that the absolute value of elasticity of demand for senior citizens is

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

Refer to the following: What are the profit-maximizing levels of output for the two goods?

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. If the firm can practice first-degree price discrimination,it will be able to collect $________ in total revenue under perfect price discrimination.

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. At the optimal price and quantity,what is demand elasticity in each market?

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 prices 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. Suppose the marketing director ignores the nighttime market and wishes to extract all consumer surplus from the daytime buyers.The optimal access charge is $_________ and the optimal usage fee is $______ per unit.

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 How much revenue will the optimal bundled price produce for Black Diamond Tennis & Golf Club?

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 rule do you follow for price determination for a firm that practices price discrimination?

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

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. A firm selling in two markets is practicing price discrimination