8. When a package of 4 units is sold for a total price of 20 to a buyer of type 1 , the consumer surplus to that buyer from buying this package is________________. a ) 20 b ) 36 c ) 24 d ) 42 e ) 12
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8. When a package of 4 units is sold for a total price of 20 to a buyer of type 1 , the
a ) 20
b ) 36
c ) 24
d ) 42
e ) 12
9. When at most one package of 4 units is available for a total price of 20 , the maximum price that a buyer of type 1 would pay for a package of 12 units is_____________.
a ) 84
b ) 96
c ) 120
d ) 114
e ) 56
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- GameZone, a video games store, is considering the best way to price two new games – a first-person shooter (FPS) and a racing game. There are four types of consumers that might buy the games with roughly equal numbers of each type, and their willingness to pay (WTP) for each game is detailed in the table below (assume that the willingness-to-pay for a second game of the same type is zero). How should Gamezone price the two games separately to maximise revenue? How should Gamezone price a bundle of both games to maximise revenue? Is there an alternative (involving bundling) that generates more revenue than either single prices or a bundle alone? Under what condition/s is bundling likely to increase profits for a firm? Consumer Type WTP for FPS game WTP for racing game A $120 $70 B $70 $120 C $160 $10 D $10 $160At the beginning of the year 2021, three friends, Ebo, Michael and Joseph decided to set up a company that produces a special kind of fruit juice called BB fruit juice in a city called St. Botch. As fresh graduate from the University of Professional Studies, Accra, you were employed as the firm's general manager in charge of the day to day running of the company. In order to make informed decisions about the firm's product, you employed an economist, who estimated the demand curve of the firm's product by using information from 30 supermarket as follows: Q$ = 99.5 – 2.5P, + 1.25P, – 0.21 + 0.15N + 0.04A Where Qg is the quantity demanded of BB fruit juice in bottles, P, is the per pottle price of BB fruit juice, P, is the per pottle price of Blue Sky, I is the per capita income of the people of St. Botch, N is the number of consumers and A is amount of money the company spends on advertising. In addition, the economist also estimated the supply function for the product as: Qi = -78 +…3.In Avenger City, there are various fried chicken consumers withFea es like Captain America, Thor and Black panther. Consumers with Characteristics of Captain America has a demand function for fried chicken with DCA(p)=10-2p, while Thor is DT(p)=5-p and Black Panther is DBP(p)=20-4p. The number of consumers with characteristics such as Captain America is 50, Thor 100 and Black Panther 150. If the price of Fried Chicken is $5, then:A. What is the total demand for fried chicken for consumers withFeatures like Captain America?B. What is the total demand for fried chicken for consumers withFeatures like Thor?C. What is the total demand for fried chicken for consumers withFeatures like Black Panther?D. What is the total demand at market level for fried chicken whenthe price is $5? If the price of fried chicken is $10, then:A. What is the total demand for fried chicken for consumers withFeatures like Captain America?B. What is the total demand for fried chicken for consumers withFeatures…
- Shell has over 13,000 gas stations in the United States. In addition to gasoline, the gas stations also sell convenience items, such as snacks, non-alcoholic beverages, wine, beer, and hot food. Suppose you work for a gas station and your boss asks you to develop a pricing strategy for bottled local wine. The demand function is ? = 100 – 4?, where ? is the monthly quantity demanded of the bottled wine and ? is the price of the bottled wine. The marginal cost per bottle of wine is $5. Complete the following tasks: 1) (Calculating) In the worksheet “Q2 Calculations” of the provided Excel file, enter formulas in columns B-D to calculate Q (quantity demanded), MC (marginal cost), and MR (marginal revenue). Please round your results to one decimal place. Note that the inverse demand function is ? = 25 − 0.25? and that the MR function can be derived from the inverse demand function using the formula introduced in Module 5. You may find it helpful to review the Excel file for Chapter 11.6. Exercise 4.6 An econometrician hired to analyse a local golf course has determined that there are two types of golfers, the regular and the occasional. The annual demand for games from regular players is given by QH = 24 - 0.3P, where P is the price of a round of golf. On the other hand, the annual demand for occasional items is given by Q° = 10 - 0.1P. The marginal cost and the average total cost per item are equal to €20. a) If you could distinguish between regular and casual players, what price would be set for each type? How many games would each type of player play? How much profit could the golf course generate? Represent graphically. b) As an alternative to the discrimination of third degree prices, those in charge consider a double tranche rate according to which the members can play as many games as they wish at a price of € 20 per game. How much profit will the golf course generate if it charges all players the same annual fee for becoming a member of the club? What if you…4. An economic consultant provides a firm's marketing manager with the following estimate of the demand function for the firm's product: Qx = 1240 – 3.13Px - 0.611P, + 2.01M + 0.30AX Px = the price of the firm's product per unit; Py = the price of another good per unit; M = money income for the average consumer; Ax = advertising costs for the firm's product. The demand function shown above indicates that: A. The firm's good (X) and the other good (Y) are substitutes and that X is an inferior good B. The firm's good (X) and the other good (Y) are complements and that X is an inferior good C. The firm's good (X) and the other good (Y) are substitutes and that X is a normal good D. The firm's good (X) and the other good (Y) are complements and that X is a normal good
- Suppose that the market for air travel between Chicago and Dallas isserved by just airlines, United and American. An economist has studied thismarket and has estimated that the demand curves for round-trip tickets foreach airline are as follows:QdU = 10,000 - 100PU + 99PA (United’s demand)QdA = 10,000 - 100PA + 99PU (American’s demand) where PU is the pricecharged by United, and PA is the price charged by American.a. Suppose that both American and United charge a price of $300 each for around-trip ticket between Chicago and Dallas. What is the price elasticityof demand for United flights between Chicago and Dallas?b. What is the market-level price elasticity of demand for air travel betweenChicago and Dallas when both airlines charge a price of $300? (Hint:Because United and American are the only two airlines serving theChicago–Dallas market, what is the equation for the total demand for airtravel between Chicago and Dallas, assuming that the airlines charge thesame price?)4. An economic consultant for X Corp. recently provided the firm's marketing manager this estimate of the demand function for the firm's product: with Q = 12,000 – 3P, + 4P,– 1M + 2A, %3D where Qxd represents the amount consumed of good X, Px is the price of good X, Py is the price of good Y, M is income, and Ax represents the amount of advertising spent on good X. Suppose good X sells for 200 per unit, good Y sells for15 per unit, the company utilizes 2,000 units of advertising, and consumer income is 10,000. How much of good X do consumers purchase? Are goods X and Y substitutes or complements? Is good X a normal or an inferior good?Many advertising slogans seem to be asserting something about people's preferences. How would you capture the following slogans with a mathematical statement about the utility function? Either find a utility function for each of the examples or discuss what properties should it have. a) Promise margarine is just as good as butter. b) Things go better with Coke. c) You can't eat just one Pringle's potato chip. d) Krispy Kreme glazed doughnuts are just better that Dunkin' Donuts
- Brit-Brick is a company that produces bricks and cement in the UK. Their largest consumer is ConstrUK, a UK construction company. The manager of Brit-Brick has asked the research department to find out how sensitive ConstrUK’s demand for bricks is. The research department has estimated that ConstrUK’s preferences over bricks (x) and cement (y) can be described by the utility function U(x,y)=x^(7/10)y^(1-7/10) The price for one bag of cement is equal to £1. It is estimated that ConstrUK’s budget is £10,000. Find the price-consumption curve for bricks and the corresponding demand curve.1 Assume there are two firms in a Hoteling Linear city. One firm is located at zero and the other at one. Assume the following utility equations: U0=v−p−tx+μ, U1=v−pn−t(1−x). Where U0 is utility from buying the good from the firm located at zero, p is the price for the firm at point zero, t is the travel cost and μ is bonus utility because the firm at point zero makes people a little bit happier. U1 is utility from buying the good from the firm at point one and pn is the price. Part a) Find the indifferent consumerBrit-Brick is a company that produces bricks and cement in the UK. Their largest consumer is ConstrUK, a UK construction company. The manager of Brit-Brick has asked the research department to find out how sensitive ConstrUK’s demand for bricks is. The research department has estimated that ConstrUK’s preferences over bricks (x) and cement (y) can be described by the utility function please see the picture attached, and b=7 The price for one bag of cement is equal to £1. It is estimated that ConstrUK’s budget is £10,000. Find the price-consumption curve for bricks and the corresponding demand curve.