problemset5

problemset5 - EC332, Fall 2009, Prof. Jordi Jaumandreu...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
EC332, Fall 2009, Prof. Jordi Jaumandreu Problem set #5 1. (Cabral) A market consists of two population segments, A and B. An individual in segment A has demand for your product =50  An individual in segment B has demandfor your product = 120 2  Segment has 1000 people in it. Segment has 1200 people in it. Total cost of producing units is = 5000 + 20  a. What is total market demand for your product? b. Assume that you must charge the same price to both segments. What is the pro f t-maximizing price? What are your pro f ts? c. Imagine now that members of segment A all wear a scarlet "A" on their shirts or blouses and that you can legally charge di f erent prices to these people. What price do you change to the scarlet "A" people? What price do you change to those without the scarlet "A"? What are your pro f ts now? 2. (Cabral) Coca-Cola recently announced that it is developing a "smart" vending machine. Such machines are able to change prices according to the outside temperature. Suppose for the purposes of this problem that the temper- ature can be either "High" or "Low." On days of "High" temperature, demand is given by = 280 2 , where Q is number of cans of Coke sold during the day and p is the price per can measured in cents. On days of "Low" temperature, demand is only = 160 2 . There is an equal number days with "High" and "Low" temperature. The marginal cost of a can of Coke is 20 cents. a. Suppose that Coca-Cola indeed installs a "smart" vending machine, and thus is able to charge di f erent prices for Coke on "Hot" and "Cold" days. What price should Coca-Cola charge on a "Hot" day? What price should Coca-Cola charge on a "Cold" day? b. Alternatively, suppose that Coca-Cola continues to use its normal vending
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/09/2010 for the course CAS ec399 taught by Professor Tack during the Spring '10 term at BCUC.

Page1 / 3

problemset5 - EC332, Fall 2009, Prof. Jordi Jaumandreu...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online