Tiger-el is an upstream manufacturer of electric trains that sells wholesale to Ihe Great Toy Store, the only such store in the area. Demand for the trains at the retail store level in inverse form is P 1,000- 2Q, where Q is the total number of trains sold. The Great Toy Store incurs no service cost in selling the train. Its only cost is the wholesale price it pays for each train. Tiger-el incurs a production cost of $40 per train. a. What wholesale price should Tiger-el charge for its trains? What price will these trains sell for at retail? How many trains will be sold? b. What profit will the toy store and the retailer earn under the pricing choices found in part (a)? c. How would the quantity of trains sold and the retail price change if Tiger-el sold the trains to The Great Toy Store at cost but also received a 66.67% sales royalty on every train sold? How would your profit calculations in part (b) change?

Tiger-el is an upstream manufacturer of electric trains that sells wholesale to Ihe Great Toy Store, the only such store in the area. Demand for the trains at the retail store level in inverse form is P 1,000- 2Q, where Q is the total number of trains sold. The Great Toy Store incurs no service cost in selling the train. Its only cost is the wholesale price it pays for each train. Tiger-el incurs a production cost of $40 per train. a. What wholesale price should Tiger-el charge for its trains? What price will these trains sell for at retail? How many trains will be sold? b. What profit will the toy store and the retailer earn under the pricing choices found in part (a)? c. How would the quantity of trains sold and the retail price change if Tiger-el sold the trains to The Great Toy Store at cost but also received a 66.67% sales royalty on every train sold? How would your profit calculations in part (b) change?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter18: Asymmetric Information

Section: Chapter Questions

Problem 18.3P

See similar textbooks

Similar questions

Assuming you are the managing director of a firm that produces three goods: A, Band C. The price elasticity of demand for A is 1.2, for B it is 1.00 and for C it is 0.75.It is known that he firm is experiencing serious cash flow problems and you have toincrease total revenue as soon as possible. If you were in a position to set the pricesfor these goods, what would be your pricing strategy for each product
Answer within 45min please Suppose that Andrew’s Hotel will be open for only two days: a peak season day and anoff-peak day. Andrew has two types of costs: room construction costs and guest service costs. Thecost of servicing any guest is 50 dollars. The cost of building a room is 400 dollars, but rooms canbe used for both types of day. Inverse demand for peak days is P = 1000 −Q, and demand foroff-peak is P = 500 −2Q.What prices should Andrew, who is looking to maximize his profits, set, and how many roomsshould he build?
Max barbershop is considering raining prices by $5 per haircut. Their current price for a cut is $23 abd babers receive 50% of the revenues for each haircut. Since Max is concerned about demand dropping due to the price increase, he is also planning to start advertising the shop on TV for $895 month. If current fixed cost are $11,576/month the current profit is $2000/month by what percent can demand decrease at the new price level and maintain current levels of profit on the business?
Explain the methods used toallocate the integratedmarketing communications(IMC) budget.
You own Athleticon, which manufactures athletic wear. Your new contract with Atlanta United, a professional soccer team, allows Athleticon to be the sole suppler of athletic wear with the “Atlanta United” logo. No one lese can manufacture athletic wear with the “Atlanta United” logo. What do you think will be Athleticon’s level of profitability on the sale of “Atlanta United” athletic wear? Explain why. Your contract with Atlanta United only lasts 3 years. It was not renewed. Other firms can now manufacture athletic wear with the “Atlanta United” logo It is now 5 years after your contract with Atlanta United was terminated. Any manufacturer that wants to can manufacture and sell athletic wear with the “Atlanta United” logo. What do you think will be the level of profitability and rate of return on manufacturing athletic wear with the “Atlanta United” logo? Explain why.
The soluation avilible I believe it is wrong so please solve it carefully Carl and Simon are the only sellers of pumpkins at the market, where the total demand function for pumpkins is q =3 ,200−1,600p. The total number of pumpkins sold at the market is q = qC + qS, where qC is the number that Carl sells, qS is the number that Simon sells. The cost of producing pumpkins for each farmer is $.50 per pumpkin; the fixed costs are zero. .a. Find the Cournot equilibrium price and quantities. .b. Find the Bertrand equilibrium price and quantities. . .c. Suppose now that every spring the snow thaws off of Carl’s pumpkin field a week before it thaws off of Simon’s. Therefore, Carl can plant his pumpkins one week earlier than Simon while predicting Simon’s choice based on the previous year information. Simon observes Carl’s choice and chooses how much pumpkin to plant. Find the new equilibrium price and quantities. .d. Compare the quantities and prices in parts a, b, and c. Rank these outcomes…
As the new general manager of the Grand Palladium Jamaica luxury all-inclusive resort, youare assessing your pricing policies. Currently, the price of a weekend stay is $2,000 perguest. You estimate the marginal cost of serving a guest at $1,600, and while yourpredecessor unfortunately did not leave you data from the pricing experiments and testmarketing she performed, you do know that such experiments were done, and that yourpredecessor was competent.a. What is your best estimate of the elasticity of demand for a weekend stay at the GrandPalladium?b. Your learned that at the current price, the resort is only 80% full on the weekends.Remembering the sense of belonging that you experienced in a crowded subway duringthe rush hour, you contemplate lowering the price so the resort is completely full. What isyour back-of-the-envelope calculation for how much you need to lower the price?c. After some thought you cooled to the idea of full occupancy. Instead, you focused yourenergy and…
Price You are the manager of a firm that charges customers $16 per unit for the first unit purchased, and $12 per unit for each additional unit purchased in excess of one unit. The accompanying graph summarizes your relevant demand and costs. 0 18 16 + 12 10 20 14 8 6 4 2 0 1 2 3 4 Quantity MC-AC D 5 6 7 ernal browser=0&launchUrl=https%253A%252F%252Fnewconnect.mheducation.com%252F#/activity/question-grow a. What is the economic term for your firm's pricing strategy? First degree price discrimination O Fourth degree price discrimination O Third degree price discrimination O Second degree price discrimination Seved b. Determine the profits you earn from this strategy.
1. Eastman Publishing Company is considering publishing an electronic textbook about spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design, and web site construction is estimated to be $160,000. Variable processing costs are estimated to be $6 per book. The publisher plans to sell single-user access to the book for $46. a. Build a spreadsheet model to calculate the profit/loss for a given demand. What profit can be anticipated with a demand of 3,500 copies?b. Use a data table to vary demand from 1,000 to 6,000 in increments of 200 to assess the sensitivity of profit to demand.c. Use Goal Seek to determine the access price per copy that the publisher must charge to break even with a demand of 3,500 copies. d. Consider the following scenarios: Scenario 1 Scenario 2 Scenario 3 Scenario 4 Scenario 5 Variable Cost/Book $6 $8 $12 $10 $11 Access Price $46 $50 $40 $50 $60 Demand 2,500 1,000 6,000 5,000 2,000 For each of these scenarios,…
List the characteristics of products that haveinelastic demand, and give several examples ofsuch products.
Suppose the following data represent the market demand for catfish: Price (per unit) $20 19 18 17 16 15 14 13 12 11Quantity demanded (units per day) 12 13 14 15 16 17 18 19 20 21Total revenue — — — — — — — — — —Marginal revenue — — — — — — — — — —Compute total and marginal revenue to complete the table above. At what rate of output is total revenue maximized? At what rate of output is MR less than price? At what rate of output does MR first become negative? Graph the demand and MR curves.
Shakti Inc. has been granted a patent for its arnica toothache balm. The table to the right shows the demand and the total cost schedule for the firm. What is Shakti's profit minus maximizingoutput? A. 4 units B. 6 units C. 7 units D. 5 units Price per dose (Dollars) Quantity Demanded (Dose) Total Cost of Production (Dollars) $80 0 $80 72 1 82 64 2 88 56 3 100 48 4 124 40 5 164 32 6 208 24 7 268 16 8 340