Reference no: EM131063518
Consider the following data for the marginal benefit (MB) of three consumers for a particular good.
|
Luke
|
|
MB
($ per unit)
|
|
Sales
(units a month)
|
|
24.00
|
|
1
|
|
18.00
|
|
2
|
|
12.00
|
|
3
|
|
6.00
|
|
4
|
|
0
|
|
5
|
|
|
Leia
|
|
MB
($ per unit)
|
|
Sales
(units a month)
|
|
20.00
|
|
1
|
|
14.00
|
|
2
|
|
8.00
|
|
3
|
|
2.00
|
|
4
|
|
0
|
|
5
|
|
|
Han
|
|
MB
($/movie)
|
|
Sales
(movies/month)
|
|
16.00
|
|
1
|
|
10.00
|
|
2
|
|
4.00
|
|
3
|
|
0.00
|
|
4
|
|
0
|
|
5
|
|
Suppose that the firm which supplies this goodhas a fixed cost of $10 and marginal cost of $3, so that total cost isTC = 10 +3Q, where Q represents output. Suppose the firm is able to bundle its output.
a. Suppose Han is a student and thus has a student card, and the other two customers do not. In this case the firm could offer separate prices for students and non-students.
i. Find the profit maximising bundlesthe firm sells.
ii. What level of consumer surplus does each consumer receive?Provide an intuitive reason for the differences in consumer surplus received by customers.
b. Now consider the case in which Leia and Han are both students, but Luke does not. In this case also the firm could offer separate prices for students and non-students.
i. Find the profit maximising bundlesthe firm sells.
ii. What level of consumer surplus does each consumer receive?Provide an intuitive reason for the differences in consumer surplus received by customers.
c. Provide an explanation for the difference in profit you found in part a and part b?
d. Now consider the case in which neither Leia nor Han have identification, like student cards discussed above, which could be used to identify them as members of a low MB group. However Luke has a membership card to an exclusive golf club.
i. In this example, could the firm profit by offering a particular price to people who show their golf club membership card?
ii. How would the firm go about pricing in this case? Identify the key economic characteristics of the firm's optimal pricing scheme. Will profit be higher or lower than that obtained under the assumptions of part a and part b?
|
Demonstrate how internetworking devices
: be able to analyse IP addressing requirements and design an addressing scheme;
|
|
Weighted average cost of capital for this firm
: The current stock price for a company is $40 per share, and there are 3 million shares outstanding. The beta for this firms stock is 1.2, the risk-free rate is 4.7, and the expected market risk premium is 5.9%. what is the Weighted Average Cost of Ca..
|
|
Information about clearwater company direct materials
: Information about Clearwater Company's direct materials cost follows: Standard price per materials gram $ 100.00 Actual quantity used 9,200 grams Standard quantity allowed for production 9,400 grams Price variance $ 77,740 F Required:
|
|
Performs its best-case and worst-case scenario analysis
: Automatic Transmissions, Inc., has the following estimates for its new gear assembly project: price = $1,090 per unit; variable cost = $310 per unit; fixed costs = $4.82 million; quantity = 72,000 units. What values should the company use for the fou..
|
|
Characteristics of the firm optimal pricing scheme
: How would the firm go about pricing in this case? Identify the key economic characteristics of the firm's optimal pricing scheme. Will profit be higher or lower than that obtained under the assumptions of part a and part b?
|
|
Indicators of a material weakness
: The PCAOB has outlined a number of circumstances that are indicators of a material weakness. In addition, other control deficiencies may or may not be a material weakness depending upon details of the circumstances involved.
|
|
Remaining to maturity a coupon interest rate
: A hospital systems bonds have four years remaining to maturity a coupon interest rate of 9% and a par value of $1,000. Suppose that your required rate of return is 12%. Would you be willing to buy this bond of the purchase price is $900? Explain why ..
|
|
Calculate the dollar value of the unhedged position
: Calculate the dollar value of the unhedged position/receivable in three months. Explain your calculations. Calculate the dollar value of the position if Dayton wish to hedge its transaction exposure in the forward market. Explain the hedging strategy..
|
|
Foreseeable future-revenues-costs and expenses are expected
: Vandalay Industries is trying to choose between two alternative (mutually exclusive) machines. Whichever machine is selected will be utilized for the foreseeable future (in addition, for the foreseeable future, all revenues, costs and expenses are ex..
|