Explain the difference in the profit realized

Reference no: EM131954328

Question 1

Suppose the number of firms you compete with has recently increased. You estimated that as a result of the increased competition, the demand elasticity has increased from -2 to -3, i.e., you face more elastic demand. You are currently charging $10 for your product. If demand elasticity is -3, you should charge [x].

Question 2

An amusement park, whose customer set is made up of two markets, adults and children, has developed demand schedules as follows:

The marginal operating cost of each unit of quantity is $5. Because marginal cost is a constant, so is average variable cost. Ignore fixed costs. The owners of the amusement part want to maximize profits.

Price ($)	Quantity
Price ($)	Adults	Children
5	15	20
6	14	18
7	13	16
8	12	14
9	11	12
10	10	10
11	9	8
12	8	6
13	7	4
14	6	2

Calculate the price, quantity, and profit if: The amusement park charges a different price in the adult market

Please express your answers for Price and Profit in whole dollars (i.e.10.00)

Please use whole numbers for Quanitity (i.e. 10, 27, 4)

Price	Quantity	Total Revenue	Marginal Revenue	Marginal Cost	Total Cost	MR-MC	Profit
		84	5.00	30.00	54.00
		91	7.00	5.00	35.00	2.00
		96	5.00	5.00	40.00	0.00
		99	3.00	5.00	45.00	-2.00
		100	1.00	5.00	50.00	-4.00
		99	-1.00	5.00	55.00	-6.00
		96	-3.00	5.00	60.00	-8.00
		91	-5.00	5.00	65.00	-10.00
		84	-7.00	5.00	70.00	-12.00
		75	-9.00	5.00	75.00	-14.00

Question 3

An amusement park, whose customer set is made up of two markets, adults and children, has developed demand schedules as follows:

Price ($)	Quantity
Price ($)	Adults	Children
5	15	20
6	14	18
7	13	16
8	12	14
9	11	12
10	10	10
11	9	8
12	8	6
13	7	4
14	6	2

Calculate the price, quantity, and profit if: The amusement park charges a different price in the child's market

Please express your answers for Price and Profit in whole dollars (i.e.10.00)

Please use whole numbers for Quanitity (i.e. 10, 27, 4)

Price	Quantity	Total Revenue	Marginal Revenue	Marginal Cost	Total Cost	MR-MC	Profit
Blank 1	Blank 2	52		5.00	20.00		Blank 3
Blank 4	Blank 5	72	10.00	5.00	30.00	5.00	Blank 6
Blank 7	Blank 8	88	8.00	5.00	40.00	3.00	Blank 9
Blank 10	Blank 11	100	6.00	5.00	50.00	1.00	Blank 12
Blank 13	Blank 14	108	4.00	5.00	60.00	-1.00	Blank 15
Blank 16	Blank 17	112	2.00	5.00	70.00	-3.00	Blank 18
Blank 19	Blank 20	112	0.00	5.00	80.00	-5.00	Blank 21
Blank 22	Blank 23	108	-2.00	5.00	90.00	-7.00	Blank 24
Blank 25	Blank 26	100	-4.00	5.00	100.00	-9.00	Blank 27
Blank 28	Blank 29	88	-6.00	5.00	110.00	-11.00	Blank 30

Question 4

Price ($)	Quantity
Price ($)	Adults	Children
5	15	20
6	14	18
7	13	16
8	12	14
9	11	12
10	10	10
11	9	8
12	8	6
13	7	4
14	6	2

Calculate the price, quantity, and profit if: The amusement park charges the same price in the two markets combined

Please express your answers for Price and Profit in whole dollars (i.e.10.00)

Please use whole numbers for Quanitity (i.e. 10, 27, 4)

Price	Quantity	Total Revenue	Marginal Revenue	Marginal Cost	Total Cost	MR-MC	Profit
Blank 1	Blank 2	143		30.00	55.00		Blank 3
Blank 4	Blank 5	168	8.33	5.00	70.00	3.33	Blank 6
Blank 7	Blank 8	187	6.33	5.00	85.00	1.33	Blank 9
Blank 10	Blank 11	200	4.33	5.00	100.00	-0.67	Blank 12
Blank 13	Blank 14	207	2.33	5.00	115.00	-2.67	Blank 15
Blank 16	Blank 17	208	0.33	5.00	130.00	-4.67	Blank 18
Blank 19	Blank 20	203	-1.67	5.00	145.00	-6.67	Blank 21
Blank 22	Blank 23	192	-3.67	5.00	160.00	-8.67	Blank 24
Blank 25	Blank 26	175	-5.67	5.00	175.00	-10.67	Blank 27
Blank 28	Blank 29	152	-7.67	5.00	190.00	-12.67	Blank 30

Question 5

Explain the difference in the profit realized under the two situations (the price in each market or in the two markets combined.)

Question 6

Time Warner could offer the History Channel (H) and Showtime (S) individually or as a bundle of both.

Suppose the reservation prices of customers 1 and 2 (the highest prices they are willing to pay) are presented in the boxes below.

The cost to Time Warner is $1 per customer for licensing fees.

Preferences

	Showtime	History Chanel
Customer 1	9	2
Customer 2	3	8

Should Time Warner bundle or sell separately?

Question 7

Time Warner could offer the History Channel (H) and Showtime (S) individually or as a bundle of both.

Suppose the reservation prices of customers 1 and 2 (the highest prices they are willing to pay) are presented in the boxes below.

The cost to Time Warner is $1 per customer for licensing fees.

Preferences

	Showtime	History Chanel
Customer 1	9	2
Customer 2	3	8

Should Time Warner bundle if everyone likes Showtime more than the History Channel, i.e., preferences are positively correlated?

Question 8

Suppose Time Warner could sell Showtime for $9, and History channel for $8, while making Showtime-History bundle available for $13. Should it use mixed bundling. i.e., sells products both separately and as a bundle?

Reference no: EM131954328

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