profit-maximizing price
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Your marketing VP says that he believes that you could make more money by first releasing a 'limited edition' version aimed at hard-core video game players and then a few months later releasing a regular edition aimed at the general public.
He estimates the following inverse demand curves for each segment
Hard-core game players: PH = $160 - 0.003QH
General public: PG= $80 - 0.00033333QG
Your CFO estimates that the short-term cost function is the same as before:
STC(QH,QG)=$1,100,000+22(QH+QG)
As is your MC functions for each market:
MC=$22
A.Calculate the profit-maximizing price that you should charge and quantity you should sell to the hardcore game-players
B.Calculate the profit-maximizing price that you should charge and quantity you should sell to the general public
C.Calculate the revenues from selling to hard-core gamers and the revenue from selling to the general public
D.Calculate the profits that you will make from segmenting the market in this way
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The profit-maximizing prices are assessed.
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A. Calculate the profit-maximizing price that you should charge and quantity you should sell to the hardcore game-players
Hard-core game players:
PH = $160 - 0.003QH
Total Revenue=TRH=PH*QH=(160-0.003QH)*QH
TRH=160QH-0.003QH^2
Marginal Revenue=MRH=d(TRH)/d(QH)=160-0.006QH
For Profit maximization Put ...
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- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India
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