Find the profit maximizing way to allocate minutes

Assignment Help Microeconomics

Reference no: EM13874973

Imagine that you are the manager of Bauleni Wireless Communications Limited, a monopolist cell phone. There are two types of consumers; business consumers (B) who value each minute of communication V = K800. And Personal customers (P) who have minute of communication at VP = k600. That is, if consumer i (B or P) talks of minutes per month and pays a monthly fee, the utility function is given by
Ui =Viq - P.

You do not know which customer is of which type and would like to offer the two different plans: a business plan with a flat monthly fee priced at P = K650 with of minutes included and a personal use plan with a flat monthly fee Pp = 350,000 which includes of p minutes. You want each customer to take a plan designed for him/her. Assume your customer does not want to have extra minutes.

1. a. Your marketing Manager proposes to award business customers of B = 1200 and personal awareness of p = 800. Will it work? Why or why not?

b. Can you find the profit maximizing way to allocate minutes to the two plans so that each type of customer takes plan designed for him/her?

Reference no: EM13874973

Questions Cloud

Calculate the net realizable value of the center accounts : South Salem Day Care Center is a not for profit organization that provides day care services. Prepare journal entries for the center to record the following events. After making all the journal entries, calculate the net realizable value of the ce..

Collection of the note receivable and the payment : During 2010, the Garson Company entered into two transactions involving promissory notes and properly recorded each transaction. These are listed next:

Prepared to make monthly payments : You’re prepared to make monthly payments of $190, beginning at the end of this month, into an account that pays 6 percent interest compounded monthly. How many payments will you have made when your account balance reaches $10,000?

What form of compensation is most desirable for the firm : From a financial reporting standpoint, what form of compensation is most desirable for the firm? From a tax-planning standpoint, what form of compensation is least desirable for the manager? For the firm?

Find the profit maximizing way to allocate minutes : Can you find the profit maximizing way to allocate minutes to the two plans so that each type of customer takes plan designed for him/her?

Create a job description for your dream job : Rationalize your compensation and benefits package. Be sure to indicate the research and considerations that went into the design of the compensation and benefits package

Explain the ethical approach concerning means : Explain the ethical approach concerning means and ends that you would apply if you had a role as the chief of police in your hometown

Explain the three types of management compensation : Identify and explain the three objectives of management compensation. Explain the three types of management compensation.

Advantages and disadvantages of partnerships and corporation : Limited Liability Companies share some of characteristics of partnerships and some of the characteristics of corporations. Write a 4-5 paragraph essay describing the advantages and disadvantages of partnerships and corporations

User Account

All Pages