User Account

All Pages

Reservation prices of three consumers for two goods

Assignment Help Microeconomics
Reference no: EM133124270

The table below shows the reservation prices of three consumers for two goods. Assume that marginal production cost is $5 for each good and $10 for the bundle.

Customer A: Good 1 is $40. Good 2 is $13. Bundle is $53.

Customer B: Good 1 is $49. Good 2 is $3. Bundle is $52.

Customer C: Good 1 is $3. Good 2 is $30. Bundle is $33.

Show all your calculations

a. If the firm were to charge only separate prices (not sell the goods as a bundle), what prices should it set for Good 1 and Good 2 to maximize profit? Assuming for simplicity that the firm has only one customer of each type, what is the firm's profit?

b. If the firm were to sell these two goods only as a bundle, what price should it set for the bundle to maximize profit? Assuming for simplicity that the firm has only one customer of each type, what is the firm's profit?

c. Can you find a mixed bundling strategy that would improve upon your results in (a) and (b)? Why can mixed bundling improve profits (hint: some consumers' reservation prices are involved)?

Reference no: EM133124270

Questions Cloud

What is the total proceeds from the bond issuance : Present value of an ordinary annuity of 1 at 6% for 20 periods 11.46992. What is the total proceeds from the bond issuance
What is expected within the next two years : What is expected within the next two years for real GDP, inflation, and unemployment for the US economy? ( please provide data and sources)
What is the accrued interest on bonds at December : Black Company: 15%, 10-year, Bonds Payable, dated January 1, 2019. What is the accrued interest on bonds at December 31, 2020
Explain the economic growth and development : What are the 3 possible ways of reducing the poverty-stricken in the Philippines concerning to economic growth and development? (3-5 sentences)
Reservation prices of three consumers for two goods : The table below shows the reservation prices of three consumers for two goods. Assume that marginal production cost is $5 for each good and $10 for the bundle.
Find the competitive equilibrium allocation and prices : Consider an economy with two goods, a public good (x) and labor (n). Individual utility is given by Ui = ln(x) + li where x = x1 +x2 and li = 24-ni .
Cost functions of the firms : Suppose that you observe an initial price of $20 in a perfectly competitive market. Firms are making zero economic profits. Then the market demand shrinks perma
Functional distribution of income : Choose 2 of the following concepts and define in the context of the textbook of this course. Indicate which concept you define at the beginning of each answer.
What is the purpose of a management representation letter : You have heard rumors that Birham Ltd is ready to merge with a competitor. What is the purpose of a management representation letter

Reviews

Write a Review

Microeconomics Questions & Answers

  Discuss reforms been done in selected industry

Choose any industry in Australia from list and discuss the reforms been done in that industry.

  Graphically demonstrate the inefficiency

Graphically demonstrate the inefficiency that occurs when sports teams produce external benefits. How will a subsidy remedy this problem?

  Discuss industry concentration-demand and market conditions

Discuss industry concentration, demand and market conditions, and the pricing behavior of Kodak in the 1990s. Do you think the industry environment is significantly different today? Explain.

  Describe chase-production, level production

In production strategies, describe chase-production, Level Production and mixed-combination. Give an example of each in logistics field.

  Explore how would you adjust your behavior in the long term

Explore how would you adjust your behavior in the long term? If you decide not to buy this product again, what will you buy instead?

  Sow ethical scholarship in accurate representation and

globalization was welcomed around the world at the beginning of the 1990s. different trade theories were used to

  What is the market clearing real interest rate

What is the market clearing real interest rate? Show your results on a real money supply, real money demand diagram and label this initial equilibrium point as point A. Be sure to label your graph completely!

  For what sorts of activities you prefer monopoly government

The city governments of Anaheim and Los Angeles are each constructing packages to attract a National Football League team to locate in one of them.

  Analyze the economic effect on various industries

Analyze the economic effect on various industries in the US as well as other countries if a Tariff (or tax) or 30% is imposed on imports from China.

  Consumption of an increase in the interest rate

Using the standard 2 periods model with period 1 on the x axis and period 2 on the y axis answer the following questions. The household has period 1 income of y, period 2 income of y’ and faces a market interest rate of r.

  Why might fire extinguishers exhibit positive externalities

Draw a graph of the market for fire extinguishers, labelling the demand curve, the social-value curve, the supply curve, and the social-cost curve.

  Main reasons for the recent popularity of data mining

1. Define data mining. Why are there many names and definitions for data mining?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd