User Account

All Pages

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.

Demand definitions, demand definitions

demand definitions

Elasticity of demand, Definition of Elasticity Is defined as the ratio...

Definition of Elasticity Is defined as the ratio of the relative change of one (dependent) variable to changes in another (independent) variable, or it's a percentage change o

Uses of indifference curve analysis, Uses of Indifference Curve Analysis ...

Uses of Indifference Curve Analysis Indifference curve analysis is useful when studying welfare economics as follows: They are used to indicate the amount of income and

Research methods, measurement and scaling techniques in business research

measurement and scaling techniques in business research

Decision tree analysis, I. A farmer – businessman is in a quandary as to wh...

I. A farmer – businessman is in a quandary as to what crop to plant in his land. He has the option to plant Crop A, Crop B, or Crop C. f the weather turns out to be good and the

State the relevant economic quantities, State the relevant economic quantit...

State the relevant economic quantities Managerial economics helps the management in predicting numerous economic quantities like profit, cost, capital, demand, price, productio

Expectation elasticity, wHAT IS THE SIGNIFICANCE OF EXPECTATION ELASTICITY ...

wHAT IS THE SIGNIFICANCE OF EXPECTATION ELASTICITY ?

Williamson model of managerial discriation, how equilibrium output can be...

how equilibrium output can be find in williamson model

Arbitrage portfolio exist, Consider an economy with three assets and three ...

Consider an economy with three assets and three states. Let be the matrix of asset payoffs at t=1 and p the vector of asset prices at t=0. Assume p 3 =2.  a) Does an ar

Waste in imperfect competition, WASTE IN IMPERFECT COMPETITION Monopol...

WASTE IN IMPERFECT COMPETITION Monopolistic competition involves some degree of waste in two aspects. When new firms enter the industry and the demand for the individual fi

Write Your Message!

Captcha
Order Assignment

Featured Services

Order Now

Popular Subjects

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: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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