2 questions., Managerial Economics

Assignment Help:
Question 1:
Martha National County Club is a golf club in an isolated wealthy community and accepts only females as members. There are 1,000 identical female members of the club and a typical member has a yearly demand for rounds of golf expressed as:
P = 150 – Q?,
where Q is the number of rounds of golf per year at a green fee of P per round.
This year, Martha has priced its annual membership fee at $7,000 and its green fee at $30 per round of golf. (Green fee includes caddie/buggy fee as well.) It costs Martha a constant $25 to provide a round of golf for each member. Martha’s annual fixed cost of running the club is $1,000,000.
(1) (20 marks) Martha is now contemplating lowering its annual membership fee to $6,500 and raising its green fee to $40 for the next year. The club’s Board feels that the 1,000 members would still be interested in maintaining their memberships at Martha next year if the price is right and that their demand will be the same as this year’s.
When it prices the club’s yearly membership and green fees for next year, should Martha continue with its current pricing scheme or switch to the new one?
(2) (20 nmarks) The community has another 1,000 identical male golfers whose individual yearly demand for golf rounds is known to be
P = 100 – Q
, but the female-only policy at Martha is forcing the male golfers to drive 100 km to a neighbor town to play golf.
There have been rallies for years led by Mr. Hootie, the chairman of The Community Council?of Men’s Organizations, during the week of the major club championship tournament ‘The Mistresses’ hosted by Martha National, and the club was urged to change its male- discriminating policy. A board member Ms. Burks at Marta National this year proposed an idea:
“Let’s erase the female-only clause from our Club Charter. Still, we can keep them away if we set the membership and green fees smart so that they don’t have an incentive to join.”
What yearly membership and per-round green fee would Martha National Golf Club have to charge to successfully exclude male golfers while trying to make as much profits as possible from the female golfers? Assume that a gender-specific pricing scheme will bring about more serious petitions and therefore every member should be charged the same set of membership and per-round green fees.
(3) (20 marks) Would it be more profitable for Martha National to cater to both female and male golfers at its best outcome? Quantify your answers. Assume that every member should be charged the same set of membership and per-round green fees.


Question 2

Tight-Sleep, Inc. is a large pharmaceutical firm based in Malaysia. It sells its brand of sleeping pills named ECONTONIN both in Asia and in Europe. Tight-Sleep hired the NUS economist Jo to estimate the daily demand in Asia and Europe, which turned out to be:
QA =60-PA andQE =44-PE
where QA(QE) is the quantity of the sleeping pills demanded in Asia(Europe) and PA (PE) is the unit price of the sleeping pills in Asia(Europe). Tight-Sleep’s average total cost (ATC) of producing sleeping pills is:
ATC=4+0.1QT,whereQT =QA +QE
is the total number of sleeping pills produced by Tight-Sleep. Transportation costs are a negligible portion of the total cost and can be neglected. Your client (Tight-Sleep) wants answers (and quickly) for the following answers.
. (1) (20 marks) If Tight-Sleep can successfully prevent arbitrage resale between the two markets, what quantities under what prices should the firm sell in each region? And what would be the maximum profit level that could be achieved under such a policy? ?(Assume that each region prohibits the firm from charging different prices for different consumers or different units ‘in each region’. That is, only the third-degree price discrimination is considered.) ?
. (2) (20 marks) Suppose that Malaysia signed an international trade agreement with the Asian and European countries, under which an MFN clause with respect to pricing applies: the identical products should be charged the same price everywhere. How much better would Tight-Sleep do by following the above strategy in (1) as compared to the best they could do under this new MFN clause? ?

Related Discussions:- 2 questions.

Ans, State the difficulties in the measurement of profit.

State the difficulties in the measurement of profit.

State the application of managerial economics, APPLICATION OF MANAGERIAL EC...

APPLICATION OF MANAGERIAL ECONOMICS Tools of managerial economics can be used to accomplish virtually all the goals of a business organisation in an efficient manner. Typical m

What do you mean by legal monopoly, Q. What do you mean by Legal Monopoly? ...

Q. What do you mean by Legal Monopoly? Legal Monopoly: Some monopolies are engendered and protected under various laws. Inventors of new processes, devices or articles attain

Price wars, on the application of any of the concepts learnt in Managerial ...

on the application of any of the concepts learnt in Managerial Economics. You may try to use these concepts to everyday problems in life or in any of the current debates on in the

Identity economics help to explain economic questions, What is identity eco...

What is identity economics? How does identity economics help to explain economic questions that standard economics fails to address?

Calculate maximize total revenue, A city has two newspapers. Demand for eit...

A city has two newspapers. Demand for either paper depends on its own price and the price of its rival. Demand functions for paper A & B respectively, measured in tens of thousands

Concept of central bank, Concept of Central bank M.H. De Kock concept o...

Concept of Central bank M.H. De Kock concept of central bank is superior to that of others as it is more inclusive. His long definition of central bank includes many of the imp

Can you explain about demand forecasting, Q. Can you explain about Demand F...

Q. Can you explain about Demand Forecasting? Demand forecasting involves forecasting and estimating the quantity of a service or product that consumers will buy in future. It a

Price elasticity and consumption expenditure, Another vital relationship th...

Another vital relationship that is often referred to in economic analysis is the relationship between consumption expenditure andprice elasticity. From the law of demand, we know t

The spendthrift economy, The Spendthrift Economy This assumes a circul...

The Spendthrift Economy This assumes a circular flow of income in a closed economy with no Government sector and no foreign trade.   It also assumes the existence of two sect

Write Your Message!

Captcha
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!

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