The equilibrium price and the quantity of haircuts and total surplus.

Question

The following table contains different consumers' values for three software titles: PowerPoint, Excel, and Word. Suppose there are 100 consumers of each type. It costs Microsoft $0 to produce each piece of software. Consumer Types Administrative Assistants Marketing/Sales PowerPoint Excel Word $76 $100 $200 $200 $100 $125 Accountants $25 $250 $25 A la carte pricing If Microsoft were to sell each of the software individually, what price should it set for each and what would its profits on each be? PowerPoint Excel Word Price per each %24 2$ %24 Profit on just that software Total profit on all software

Answer 1

Question

Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 7, Problem 8PA

To determine

The equilibrium price and the quantity of haircuts and total surplus.

Expert Solution & Answer

Trending nowThis is a popular solution!

See solution

Check out sample textbook solution

Students have asked these similar questions

The following table contains different consumers' values for three software titles: PowerPoint, Excel, and Word. Suppose there are 100 consumers of each type. It costs Microsoft $0 to produce each piece of software. Consumer Types Administrative Assistants Marketing/Sales PowerPoint Excel Word $76 $100 $200 $200 $100 $125 Accountants $25 $250 $25 A la carte pricing If Microsoft were to sell each of the software individually, what price should it set for each and what would its profits on each be? PowerPoint Excel Word Price per each %24 2$ %24 Profit on just that software Total profit on all software

Question 1: Microsoft sells two types of office software, a word processor it calls Word, and a spreadsheet it calls Excel. Both can be produced at zero marginal cost. There are two types of consumers for these products, who exist in roughly equal proportions in the population: authors, who are willing to pay $120 for Word and $40 for Excel, and economists, who are willing to pay $50 for Word and$150 for Excel. a. Suppose that Microsoft execs decide to sell Word and Excel separately. What price should Microsoft set for Word? (Hint: Is it better to sell only to authors, or to try to sell to both authors and economists?)What price should Microsoft set for Excel?What will Microsoft’s profit be from a representative group of one author and one economist?b. Suppose that Microsoft decides to bundle together Word and Excel in a package called Office, and not offer them individually. What price should Microsoft set for the package?How much profit will Microsoft generate from a representative…

Pic 1 : You live in a town with 300 adults and 200 children, and you are thinking about putting on a play to entertain your neighbors and make some money. A play has a fixed cost of $2,000, but selling an extra ticket has zero marginal cost. Here are the demand schedules for your two types of customers: Price Adults Children (Dollars) (Tickets) (Tickets) 10 0 0 9 100 0 8 200 0 7 300 0 6 300 0 5 300 100 4 300 200 3 300 200 2 300 200 1 300 200 0 300 200 To maximize profit, you would charge $ ? for an adult's ticket and $ ? for a child's ticket. Total profit in this case would be $ ? The city council passes a law prohibiting you from charging different prices to different customers. Now you set a price of $ ? for all tickets, resulting in $ ? in profit. Pic 2 : Indicate whether each of the following groups of people is better off, worse off, or the same because of the law prohibiting price discrimination.…

Answer 2

Question

Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 7, Problem 8PA

To determine

The equilibrium price and the quantity of haircuts and total surplus.

Expert Solution & Answer

Trending nowThis is a popular solution!

See solution

Check out sample textbook solution

Answer 3

Question

Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 7, Problem 8PA

To determine

The equilibrium price and the quantity of haircuts and total surplus.

Expert Solution & Answer

Trending nowThis is a popular solution!

See solution

Check out sample textbook solution

Answer 4

Question

Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 7, Problem 8PA

To determine