Class 13-2010

Class 13-2010 - Managerial Econ Class 13 Bundling Oligopoly...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
10/21/2010 1 THE UNIVERSITY OF BRITISH COLUMBIA Managerial Econ: Class 13 Bundling; Oligopoly 1. Introduction to Bundling 2. Pure Bundling 3. Mixed Bundling 4. Oligopoly and Game Theory 5. The Cournot Model 6. Take Home Points (Summary) THE UNIVERSITY OF BRITISH COLUMBIA Announcements Midterm Exam on Wednesday, Oct. 27 at 6:30 pm (to 8:30). If your last name begins with letters A – H go to Woodward 1. If your last name begins with letters I – Q go to Woodward 4. If your last name begins with letters R – Z go to Woodward 6. 20 multiple choice and 4 longer questions (to be chosen out of 5). Old exams are good practice but be careful as the order of topics changes a bit from year to year. You only have to worry about topics we have covered up to and including today. You do not need to read anything beyond Section 11.3 in the text. We will do review questions next class.
Background image of page 1

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

View Full DocumentRight Arrow Icon
10/21/2010 2 THE UNIVERSITY OF BRITISH COLUMBIA Clicker Question 1 (Review of Two Part Pricing T* MC P* D The diagram to the right illustrates two-part pricing for a single consumer. The firm maximizes profit by a. Charging a per-unit fee equal to area T*. b. Charging an access fee equal to area T*. c. Charging a per-unit fee above MC. d. Producing less than the efficient (surplus-maximizing) level of output. e. None of the above. THE UNIVERSITY OF BRITISH COLUMBIA Bundling is a type of pricing in which two or more goods are combined and offered at a combined price. Examples: Soup and Salad special. Lift pass, ski lesson, and ski rental at Whistler. Airfare, hotel and 3-day pass for Disneyland. Pure bundling: Only the bundle is offered. Mixed bundling: Both the bundle and the stand-alone items are offered. 1. Introduction to Bundling
Background image of page 2
10/21/2010 3 THE UNIVERSITY OF BRITISH COLUMBIA Consider the following willingness to pay data: Word Processor Spreadsheet Consumer A 120 50 Consumer B 90 70 The entries show each consumer’s willingness to pay for a word processor and a spreadsheet. The marginal cost of providing a extra copies of the programs is zero. The same prices must be charged to each consumer. If the firm sells the Word Processor for 120 it will sell to Consumer A only. If the firm sells the Word Processor for 90 it will sell to both consumers. The firm would not sell at price above 120, strictly between 90 and 120 or below 90. 2. Pure Bundling THE UNIVERSITY OF BRITISH COLUMBIA Clicker Question 2. Word Proc. Spreadsheet Bundle Consumer A 120 50 170 Consumer B 90 70 160 Assume the firm seeks to maximize profit. Which statement is correct?
Background image of page 3

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

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 14

Class 13-2010 - Managerial Econ Class 13 Bundling Oligopoly...

This preview shows document pages 1 - 4. Sign up to view the full document.

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