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finallast - Name_ ISyE 4803B Final Exam Spring 2006 Please...

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Name________________________________ ISyE 4803B – Final Exam Spring 2006 Please show all work for partial credit . 1. ( 30 points ) There are two markets with the following price response functions: 2 2 1 1 3 130 100 Q P Q P = = If your unit cost is \$5, answer the following: a. If you can only set 1 price, what should it be and what would your corresponding profit be? b. How much more additional profit would you make if you could perfectly segment the markets? c. Suppose you can’t segment the market, but are going to use two 2-part tariffs. Write the incentive compatibility constraint(s).

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2. ( 15 points ) You have four car types: luxury (L), full size (F), midsize (M), and compact (C) that you rent. Find the protection level for F given the following data (assume the marginal cost for all cars is 0, and demand is normally distributed): Type Price (\$) Mean μ Std Dev. σ L 50 30 20 F 40 50 40 M 20 60 40 C 15 75 50 3. ( 7 points ) Explain in words what the protection level and nesting means.
4. ( 15 points

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This note was uploaded on 04/14/2009 for the course ISYE 4803 taught by Professor Staff during the Spring '08 term at Georgia Tech.

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finallast - Name_ ISyE 4803B Final Exam Spring 2006 Please...

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