Estimate on weekends the demand for product is much higher

Reference no: EM13201116

Economists estimate that on weekends (thursday-sunday) the demand for your product is much higher than on the weekdays (monday-wednesday). On weekends. the inverse demand curve for a typical customer is P= 10 - 0.001Q; on weekdays, it is P=5- 0.01Q. The marginal cost of producing an additional unit of output is 0. (yes, 0).

a. devise separate two-part pricing schemes for weekdays and weekends. Find a profit per customer for weekdays and weekends. Show work.

b. devise a peak-load pricing scheme, where weekends are peak and weekdays are off-peak. Find profit per customer for weekdays and weekends. Show work.

c. Based on profits, which pricing scheme do you choose?

Reference no: EM13201116

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