Unformatted text preview: if he is to charge one price for everyone? a. $3.13 b. $5.00 c. $15.00 d. $20.63 e. $20,625.00 10. Integrated Question: Nathan is kidnapped by pirates. The pirates demand a $800,000 ransom, or they will take Nathan's head. Nathan, being quick minded and wants to save his life, throws the following offer: if the pirates spare his life and set him free, they will receive $1,000,000. However, the pirates know that there is only 50% chance that Nathan will keep his promise. The pirate spend a night drafting the following outcome table (the values are in hundredthousand dollars, corresponding to the conditions above): Nathan Pirates The pirates come back the next day to renegotiate the deal. The pirates have utility function U=2W2, where W is their income. Out of the following possible offers, which one should Nathan pick so that he will be set free? a. Maintain the same offer as yesterday. b. Offer to pay $900,000, with a 10% chance of getting an additional $100,000. c. Offer to pay $1,100,000. d. Offer to pay $1,200,000. e. Offer to either pay $1,600,000 or nothing. 11. Price Discrimination: The cookie market is monopolized under government policies and has two kinds of consumers, with (inverse) demand schedules P1=504Q1 and P2=304Q2. The marginal cost of the producer is constantly Set free Don't set free Pay X, X 8, 8 Don't pay 0, 0 0,  10. If the firm is required to charge equal consumption fee for everyone, how much should the membership fee be? a. $10 for everyone b. $25 for everyone c. $50 for everyone d. $50 for group 1 and $25 for group 2 e. $5 for group 1 and $10 for group 2 12. Bundling: COMM295's textbook has a corresponding study guide. However, not all students value the book and study guide equally. Below are the three types of students: Textbook Study Guide Bundle Student A $60 $5 $65 Student B $40 $20 $60 Student C $30 $40 $70 Assuming no cost, what is the profit maximizing strategy? a. Pure bundling strategy at $60 b. Pure bundling strategy at $65 c. Mixed bundling strategy with bundle price $60, textbook price $60 and study guide price $40 d. Mixed bundling strategy with bundle price $65, textbook and stud...
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 Fall '09
 RATNA
 Andrew, a. Annie

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