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Advanced Pricing Techniques

The Wall Street Journal is purchased both by general readers, but it also offers student pricing through universities. Weekly demand from general readers is given by DG = 1.2 - 0.01Q, and from students is DS = 0.8 - 0.01Q. Q is in thousands of newspapers. The cost of production doesn't differ between types of readers, and is given by MC = 0.2 + 0.01Q. (In finding a graphical solution, have Q go from 0 to 120 in increments of 10.)
a. Describe why there might be this difference in demand between the two types of readers.
b. How many total copies of the Wall Street Journal should be printed?
c. How many copies should be sold to general readers, and how many to students?
d. What price should be charged to general readers, and what price to students?

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The Wall Street Journal is purchased both by general readers, but it also offers student pricing through universities. Weekly demand from general readers is given by DG = 1.2 - 0.01Q, and from students is DS = 0.8 - 0.01Q. Q is in thousands of newspapers. The cost of production doesn't differ between types of readers, and is given by MC = 0.2 + 0.01Q. (In finding a graphical solution, have Q go from 0 to 120 in increments of 10).

a. ...

Solution Summary

The solution discusses advanced pricing techniques.

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