QUESTION 2 Uber provides point to point car transport services in Brisbane. The typical Uber service is called UberX. Uber also offers a service called UberSelect, a premium service that uses expense, newer cars. UberSelect costs approximately 40% more for customers than UberX. Which of the following statements are true: UberSelect is an example of third degree price discrimination. UberSelect is an example of using peak load pricing. Charging the same price for UberX and UberSelect would give Uber greater profits. The decision to charge customers more for UberSelect is a result of their demand being more elastic than UberX customers.
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- Joe Smiley buys his mobile phone services from Sprint, the sole provider in his state of Wyoming. Sprint offers the following pricing plans: a fee of 10 dollars per month and 50 minutes of free calls per monthor a fee of 20 dollars per month and 100 minutes of free calls. Under both plans the price of additional calls is 25 cents per minute. Joe Smiley's demand curve for mobile phone services is P=100 - 0.5Q where P is measured in cents/minute and Q is measured in minutes per month. Answer the following questions: a) suppose Joe Smiley subscribes to the first plan (10 dollar fee and 50 free minutes)(i) how much calling time would he consume? (ii) what would be his total benefit? What would be his surplus? b) suppose Joe Smiley subscribes to the second plan (20 dollar fee and 100 free…Joe Smiley buys his mobile phone services from Sprint, the sole provider in his state of Wyoming. Sprint offers the following pricing plans: a fee of 10 dollars per month and 50 minutes of free calls per month or a fee of 20 dollars per month and 100 minutes of free calls. Under both plans the price of additional calls is 25 cents per minute.Joe Smiley's demand curve for mobile phone services is P=100 - 0.5Q where P is measured in cents/minute and Q is measured in minutes per month. a) suppose Joe Smiley subscribes to the first plan (10 dollar fee and 50 free minutes) (i) how much calling time would he consume? (ii) what would be his total benefit? What would be his surplus? b) suppose Joe Smiley subscribes to the second plan (20 dollar fee and 100 free minutes) (i) how much calling time would he consume? (ii) what would be his total benefit? What would be his surplus? c) which plan would Joe Smiley choose? He will choose plan (b) because it maximizes his surplusA manager of a nightclub realizes that demand for drinks is more elastic among students and is trying to determine the optimal pricing schedule. Specifically, he estimates the following average demand for his customer types: Under 25: qr =18-5p Over 25: q=10-2p The two age groups visit the nightclub in equal numbers on average. Assume that drinks cost the club $2 to make. If the manager can charge a separate entry fee and a price per drink for each group, what two-part price will the manager set for reach group. Now suppose that once again it is impossible to identify which group the customers belong. Suppose the manager lowers the price of drinks to equal to marginal cost and still wanted to attract both customers, what entry fee would the manager set? Compare the profits earned in parts a) to d). Which scheme would you choose if you could not identify customer type and which would you choose if you could identify customer type.
- Question 5: Jimmy has a room that overlooks, from some distance, a major league baseball stadium. He decides to rent a telescope for $50 a week and charge his friends and classmates to use it to peep at the game for 30 seconds. He can act as a monopolist for renting out "peeps". For each person who takes a 30 second peep, it costs Jimmy $.20 to clean the eyepiece. Jimmy believes he has the following demand for his service: Price of a Peep $1.20 Quantity of peeps demanded 1.00 90 100 150 200 250 300 70 60 50 350 40 30 400 450 20 10 500 550 a) For each price, calculate the total revenue from selling peeps and themarginal revenue per peep. Price Quantity TR MR $1.20 100 90 100 150 200 70 250 60 300 350 50 40 30 400 450 20 500 10 550 b) At what quantity will Jimmy's profit be maximized? What price will he charge? What will his total profit be? c) Jimmy's landlady complains about all the visitors coming into the building and tells Jimmy to stop selling peeps. Jimmy discovers, though, if he…Suppose a movie theater determines that the elasticity of demand for movie tickets is -2.0 for senior citizens and –1.5 for adults under age 65, and the marginal cost is $2 per consumer. Use the Lerner index to determine how much senior citizens should be charged and how much adults under age 65 should be charged. A different movie theater, which faces the same marginal costs, charges consumers $6 for matinee movies and $10 for evening movies. Use the Lerner Index to calculate the price elasticity of demand for matinee consumers and evening consumers.Question 1A manager of a nightclub realizes that demand for drinks is more elastic among students and is trying to determine the optimal pricing schedule. Specifically, he estimates the following average demand for his customer types: Under 25: q^r=18-5pOver 25: q=10-2p The two age groups visit the nightclub in equal numbers on average. Assume that drinks cost the club $2 to make. 1. If the manager cannot identify to which group his customers belong, what is the uniform monopoly price? 2. If the manager can identify to which group his customers belong, what price will he charge each group. Assume the manager can only charge a single price to each group 3. If the manager can charge a separate entry fee and a price per drink for each group, what two-part price will the manager set for reach group. 4. Now suppose that once again it is impossible to identify which group the customers belong. Suppose the manager lowers the price of drinks to equal to marginal cost and still wanted to…
- Q3) How is peak-load pricing a form of price discrimination? Can it make consumers better off? Give anexample.Suppose Verizon has only three cell phone customers. The demand curve for each customer’s monthly demand (in hours) is shown here: Here p = price in dollars charged for each hour of cell phone usage. It costs Verizon 25 cents to provide each hour of cell phone usage. a. If Verizon charges the same price for each hour of cell phone usage, what price should they charge? b. Find the profit maximizing a two-part tariff for Verizon. How much does the best two-part tariff increase the profit over the profit maximizing the single price?Amazon Discrimination In September 2000, Amazon offered a Planet of the Apes DVD to customers using a Netscape Web browser for $64.99. Several seconds later, however, a similar search performed with Microsoft’s Internet Explorer browser resulted in a price of $74.99 for the same product. Why? Price Discrimination Describe a price discrimination opportunity your company faces—direct, indirect, or bundling. Tell your company how best to implement the scheme, and compute the profit consequences of implementing the scheme.
- Review the following hypothetical scenario and answer the following question: A number of groups have put pressure on the FCC to mandate that cable companies offer their channels à la carte rather than in bundles. We are opposed to this measure and will continue to strive to provide channels in bundled tiers. However, we want to be prepared in case we need to offer single-channel pricing. Using existing market research, we were able to calculate an estimated own-price elasticity of demand for a number of our most popular cable channels. Use this information, along with the marginal cost for each channel, to calculate the profit-maximizing price for each of these channels.A manager of a nightclub realizes that demand for drinks is more elastic among students and is trying to determine the optimal pricing schedule. Specifically, he estimates the following average demand for his customer types: Under 25: q^r=18-5pOver 25: q=10-2p The two age groups visit the nightclub in equal numbers on average. Assume that drinks cost the club $2 to make. A) suppose that once again it is impossible to identify which group the customers belong. Suppose the manager lowers the price of drinks to equal to marginal cost and still wanted to attract both customers, what entry fee would the manager set?If price discrimination is the option to implement within the context of elasticity of demand, what pricing policy should be implemented in each market to raise total revenue?