2023 Assume an automobile manufacturer can sell its pickup truck with or without a towing package Customer | Assignments Online
2023 Assume an automobile manufacturer can sell its pickup truck with or without a towing package Customer | Assignments Online
Assignments Online 2023 Business Finance
Assume an automobile manufacturer can sell its pickup truck with or without a towing package. Customer Group A is willing to pay a maximum of $30,000 for the truck and $1,100 for the towing package. Customer Group B is willing to pay $29,000 for the SUV and $1,000 for the towing package. Assuming the manufacturer cannot price discriminate but can bundle the products or sell them separate, which of the options below maximizes its revenues?
Answer
Sell the components as a bundle for $30,500.
Sell the components separately, charging $30,000 for the SUV and $1,000 for the towing package.
Sell the components separately, charging $29,000 for the SUV and $1,100 for the towing package.
Sell the components separately, charging $29,000 for the SUV and $1,000 for the towing package.
Mapleville Tennis & Golf Club offers golf and tennis memberships to the residents of Mapleville. Market research has found there are two types of families living in the city: 120 golf-oriented families and 100 tennis-oriented families. Information on the demand prices for golf and tennis memberships by family type is given below. It is not possible to identify family types for pricing purposes, and all costs are fixed so that maximizing total revenue is equivalent to maximizing profit.
Type of family Tennis membership only Golf membership only
Tennis-oriented $150 $50
Golf-oriented $75 $200
If Mapleville Tennis & Golf Club plans to offer golf and tennis memberships separately, what prices should be charged for each kind of membership it wishes to maximize profit?
Answer
Charge $75 for tennis memberships and $200 for golf memberships.
Charge $75 for tennis memberships and $50 for golf memberships.
Charge $150 for tennis memberships and $200 for golf memberships.
Charge $150 for tennis memberships and $50 for golf memberships.
The segmenting of customers into several small groups such as household, institutional, commercial, and industrial users, and establishing a different rate schedule for each group is known as
Answer
first-degree price discrimination.
market penetration.
third-degree price discrimination.
second-degree price discrimination.
Which of the following is NOT considered to be a form of price discrimination?
Answer
Declining block pricing
Group pricing
Bundling multiple products
Personalized pricing
Which of the following is NOT a shortcoming of cost-plus pricing?
Answer
Most often the actual profit margin will be less than profit maximizing margin.
Cost-plus pricing allows firms to set prices equal to a predetermined markup above average costs.
It is unlikely that arbitrary rules or historical precedent to choose a markup will product the maximum profit.
Because cost-plus pricing involves average rather than marginal cost, it does not use the MR=MC rule to find the profit maximizing rate of production.
Which of the following is an example of two-part pricing?
Answer
In order to buy a cell phone, you must buy a package that contains other features, such as voice mail and text messaging.
A firm, e.g., Sam’s Club or Costco, charges a membership fee that is separate from the price paid for items purchased from the firm.
You pay full price for the first pair of shoes and half price for the second pair.
Tickets for matinees are less expensive than tickets for evening performances when demand is higher.
To maximize profits, a monopolist that engages in price discrimination must allocate output in such a way as to make identical the _______ in all markets.
Answer
ratio of price to marginal cost
ratio of marginal cost to marginal utility
ratio of price to elasticity
marginal revenue
n ____ price discrimination, it is possible for the entire consumer surplus to be captured by the seller.
Answer
first-degree
second-degree
third-degree
a and b
What, according to economists, is a problem with uniform pricing?
Answer
It is illegal.
It does not allow the seller to use markup pricing.
It is often not the most profitable method for pricing.
It is hard to charge all customers the same amount for a product.
Many years ago, the Wall Street Journal published an article about a dating service. The article noted that men were charged $300, above the $250 charged for women. The dating service’s owner said that the difference in price compensated for inequities in pay scales between men and women. Which of the following statements below is an alternative explanation that an economist would look for?
Answer
Men have a higher (or more elastic) price elasticity of demand for dating services than do women.
More women than men use dating services.
More men than women use dating services.
Men have a lower (or less elastic) price elasticity of demand for dating services than do women.
_____ is the price at which an intermediate good or service is transferred from the selling to the buying division within the same firm.
Answer
Incremental price
Marginal price
Full-cost price
Transfer price
Mapleville Tennis & Golf Club offers golf and tennis memberships to the residents of Mapleville. Market research has found there are two types of families living in the city: 120 golf-oriented families and 100 tennis-oriented families. Information on the demand prices for golf and tennis memberships by family type is given below. It is not possible to identify family types for pricing purposes, and all costs are fixed so that maximizing total revenue is equivalent to maximizing profit.
Type of family Tennis membership only Golf membership only
Tennis-oriented $150 $50
Golf-oriented $75 $200
If Mapleville Tennis & Golf Club plans to offer bundled golf and tennis memberships, what price should it charge to maximize profits?
Answer
$350
$200
$275
$250
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