F11MKT300_Midterm_Exam_V2

# F11MKT300_Midterm_Exam_V2 - MKT300 Midterm Exam Version 2...

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MKT300 Midterm Exam Version 2 The next 6 questions are based on the following scenario. Consider the following marketing with 12 customers. The Table below shows the Value that each customer places on Company A’s product and the reservation utility (\$X) of each customer. The unit variable cost of the product is \$10 . Customer Value \$X 1 120 20 2 100 0 3 100 10 4 100 30 5 95 10 6 87 0 7 80 10 8 75 0 9 70 0 10 60 10 11 60 5 12 40 0 1. How many customers will buy Company A’s product if it charges \$72? A. 3 customers B. 5 customers C. 6 customers D. 7 customers 2. How many customers will buy Company A’s product if it charges \$54? A. 6 customers B. 8 customers C. 9 customers D. 10 customers 3. If Company A charges \$70, what are its profits? A. \$480

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B. \$540 C. \$600 D. \$630 4. If Company A charges \$51, what are its profits? A. \$410 B. \$440 C. \$450 D. \$550 5. What is the consumer surplus enjoyed by Customer 3 and Customer 5, respectively, if the Price is \$75? (Consumer surplus for Customer 3 is displayed first, followed by that for Customer 5) A. \$25 for Customer 3, \$10 for Customer 5 B. \$25 for Customer 3, \$20 for Customer 5 C. \$15 for Customer 3, \$10 for Customer 5 D. \$15 for Customer 3, \$20 for Customer 5 6. Suppose the current price is \$72. What is the least by which the Company must change its price if it were to induce Customer 7 to buy the product? A. \$1 decrease B. \$2 decrease C. \$8 decrease D. \$10 decrease
The next 4 questions are based on the following scenario. Consider the following Alternating Offer Bargaining Process between two CEOs, Anna and Betty. Stage 1 : Value of the business pie is \$150. Anna makes the first proposal to split the pie. Betty can Accept or Reject. If she accepts, the deal is agreed and the process ends. If she rejects, we go to Stage 2. Stage 2 : Value of the business pie drops to \$120. Betty makes a counterproposal to split the pie. Anna can Accept or Reject. If she accepts, the deal is agreed and the process ends. If she rejects, we go to Stage 3. Stage 3 : Value of the business pie drops to \$90 . Anna makes one more proposal to Betty to split the pie. Betty can Accept or Reject. If she accepts, the deal is agreed and the process ends. If she rejects, both

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## This note was uploaded on 12/12/2011 for the course MKT 300 taught by Professor Barnes during the Fall '08 term at University of Wisconsin.

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F11MKT300_Midterm_Exam_V2 - MKT300 Midterm Exam Version 2...

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