Consumer indifferent between iphone and galaxy

Assignment Help Business Economics

Reference no: EM13690306

Suppose Apple sells phones with 4-inch screens and Samsung sells those 5-inch ones. Consumers have their hands of different sizes. Their most preferred sizes, as a result (that might depend on the probability that they drop their phones), are distributed uniformly on [4, 5] inches. The preferred smart phone will give each consumer a benefit v when consuming it. Suppose for each unit of difference between their consumed size and their preferred screen sizes, the consumer will be disutilized by t. Suppose Apple and Samsung are charging prices Pa, Ps, respectively. The marginal cost for producing a phone is c for both the firms.

a) Please write down the utility for a consumer with preferred size, when he/she is consuming the 4-inch iphone. Also please write down the utility when he/she is consuming the 5-inch galaxy.

b) What is the theta for the consumer indifferent between iphone and galaxy?

c) Given Pa,Ps, what are the demand functions for Apple and Samsung? d) What are the equilibrium prices for iphone and Samsung?

e) Now suppose v = 700, t = 400, what is the price in the market?

f) Suppose a larger iphone is easy to get bent.. Consumers understand this and they are more tolerant to an iphone smaller than they like (for the rigidity purpose). As a result, the disutility parameter for an iphone ta = 400, smaller than that for Samsung, ts = 500. What are the prices in this market? Should Apple tries to make iphone less "flexible" (which means its disutility parameter becomes the same as Samsung)?

Reference no: EM13690306

Questions Cloud

Allocative inefficiency in a labor market may be caused by : For the supply and demand curves in the diagram, the level of employment will be highest at: Allocative inefficiency in a labor market may be caused by:

What is total revenue at that point : If all n identical firms in a market belong to a cartel, how much total output will be produced relative to the monopoly output, and how much will each firm produce?Suppose the graph on the next page depicts the demand for football tic k ets at Gr..

Compared to an otherwise identical competitive firm : Suppose product demand is given by the column labeled D1. If the wage rate rises from $100 to $130, the firm will reduce the quantity of labor employed by _____ unit(s) Compared to an otherwise identical competitive firm, a firm with monopoly power w..

Find the unique pure-strategy nash equilibrium : Bribes: Two players find themselves in a legal battle over a patent. The patent is worth 20 to each player, so the winner would receive 20 and the loser 0. Given the norms of the country, it is common to bribe the judge hearing a case.

Consumer indifferent between iphone and galaxy : Suppose Apple sells phones with 4-inch screens and Samsung sells those 5-inch ones. Consumers have their hands of different sizes. Their most preferred sizes, as a result (that might depend on the probability that they drop their phones), are distrib..

What is the maximum annual membership fee : The only DVD rental club available to you charges $4 per movie per day. If your demand for movie rental is P=20-2Q, where P is the rental price and Q is the quantity demanded, what is the maximum annual membership fee you would be willing to pay to j..

What is the nash equilibrium in this game : A case study in the chapter describes a phone conversation between the presidents of American Airlines and Braniff Airways. Let's analyze the game between the two companies.

Company faces a number of different fixed and variable costs : Everything looks like a Nail Inc. is a manufacturing company that produces hammers. The company faces a number of different fixed and variable costs.

Increase in the price of a gross substitute for labor : (a) an increase in the price of a gross substitute for labor, (b) a decrease in the price of a pure complement in production with labor, (c) a decrease in the demand for the product that the labor helps produce.

User Account

All Pages