firm's profits
Not what you're looking for?
I'd like some help with this problem to make sure I'm heading in the right direction. This is from Baye 6th edition.
You are the manager of a firm that produces products X and Y at zero cost. You know that different types of consumers value your two products differently, but you are unable to identify these consumers individually at the time of the sale. In particular, you know there are three types of consumers (1,000 of each type) with the following valuations for the two products:
Consumer type Product x Product Y
1 $60 $50
2 50 125
3 25 140
A.What are your firm's profits if you charge $25 for product X and $50 for product Y?
B.What are your profits if you charge $60 for product x and $140 for product y?
C.What are your profits if you charge $110 for a bundle containing one unit of product X and one unit of Product Y?
D.What are your firm's profits if you charge $175 for a bundle containing one unit of X and one unit of Y, but also sell the products individually at a price of $60 for product x and $140 for product Y?
Purchase this Solution
Solution Preview
Consumer type Product x Product Y
1 $60 $50
2 50 125
3 25 140
Assumption is made that when your price < valuation price for a customer category, all customers will buy the product as they percieve the value to be more than price paid
A.What ...
Education
- BE, Bangalore University, India
- MS, University of Wisconsin-Madison
Recent Feedback
- "Your explanation to the answers were very helpful."
- "What does 1 and 0 means in the repair column?"
- "Went through all of the formulas, excellent work! This really helped me!"
- "try others as well please"
- "Thank you, this helped a lot. I was not sure how to plug in those numbers to a formula. This was a great help. Now I have to figure out how to explain cost of capital is used in net present value analysis, and how cost of capital is used in net present value analysis. This stuff gets confusing."
Purchase this Solution
Free BrainMass Quizzes
Economics, Basic Concepts, Demand-Supply-Equilibrium
The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.
Economic Issues and Concepts
This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.
Elementary Microeconomics
This quiz reviews the basic concept of supply and demand analysis.
Pricing Strategies
Discussion about various pricing techniques of profit-seeking firms.
Basics of Economics
Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.