Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
9th Edition
ISBN: 9781259290619
Author: Michael Baye, Jeff Prince
Publisher: McGraw-Hill Education
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Chapter 8, Problem 16PAA
To determine

Price and quantity combination of computers that should be produced to maximize firm's profit is to be ascertained.

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You are a pricing analyst for QuantCrunch Corporation, a company that sells a statistical software package. To date, you only have one client. A recent internal study reveals that this client’s inverse demand for your software is P=1500-5Q and that it would cost you $1,000 per unit to install and maintain software at this client’s site. What is the profit that results from two-part pricing?   (Hint: set the per-unit price for each unit of the software installed and maintained equal to marginal cost; and charge a fixed “licensing fee” that extracts all consumer surplus from the client)
Your family owns a small sandwich shop called Healthy Hearty Sandwich that mainly caters to local residents in Glendale. As of late, your parents are concerned that business has been slow due to the economic downturn. Your father suggests that you increase the price of sandwiches so you can earn more profit for every sandwich you sell, but your mom is worried that this is going to lose too many customers. She reminds the family that last time you raised the price by 10%, half the people went to your competitors’ store My Sandwich Is Better Than Yours. Your sister wonders if there is anything that can be done to attract more customers other than through a price cut. Your brother remembers that you are currently taking microeconomics and asks if you can share some insight to what the family can do. What economic wisdom will you share with your family? Keep in mind that no one in the family has formally taken an economics class before, which means you should try to avoid too much economic…
Problem 08-16 You are the manager of College Computers, a manufacturer of customized computers that meet the specifications required by the local university. Over 90 percent of your clientele consists of college students. College Computers is not the only firm that builds computers to meet this university's specifications; indeed, it competes with many manufacturers online and through traditional retail outlets. To attract its large student clientele, College Computers runs a weekly ad in the student paper advertising its “free service after the sale" policy in an attempt to differentiate itself from the competition. The weekly demand for computers produced by College Computers is given by Q= 800 – 2P, and its weekly cost of producing computers is CQ) = 1,200 + 2Q². If other firms in the industry sell PCs at $300, what price and quantity of computers should you produce to maximize your firm's profits? Price: $ Quantity: What long-run adjustments should you anticipate? computers Exit by…
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