Reference no: EM13201065
You are the branch manager given the objective to maximize revenues by pricing a new stereo system composed of a reciever, CD player, and speakers. Your economists have estimated that two diffeernt groups will purchase these products: students and club owners. The economists' analysis indicates that the total maket for its brand of stereos consists of 10 students and 5 club owners. In addtition, it is estimated that the maximum amount each group will pay for each steo component is as follows:
Groups Receivers CD Player Speakers Bundle
students$250 $150 $100 ?
club owners $200 $75 $250 ?
(a) In the standard pricing strategy, what price should you charge for each item seperately? How much revenue do you earn from each item? How much revenue do you earn in total? Show work.
(b) How much is your revenue under perfect price discrimination? Show work.
(c) Fill out the rest of the table. When bundling the components and charging one price for the bundle, what price should you charge to maximize revenues? How much will you earn? Show work.
(d) Which strategy do you choose if both are possible for you?
(e) What might prevent first-degree price discrimination?
(f) How much are you willing to spend to be able to implement first-degree price discrimination? Show work, explain briefly.
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: the branch manager given the objective to maximize revenues by pricing a new stereo system composed of a reciever, CD player, and speakers. Your economists have estimated that two diffeernt groups will purchase these products.
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