14 3 selling salsa your family business produces a

This preview shows page 48 - 50 out of 89 pages.

We have textbook solutions for you!
The document you are viewing contains questions related to this textbook.
Mathematics for Elementary School Teachers
The document you are viewing contains questions related to this textbook.
Chapter 7 / Exercise 61
Mathematics for Elementary School Teachers
Bassarear
Expert Verified
14-3 Selling SalsaYour family business produces a secret recipe salsa and distributes it through both smaller specialty stores and chain supermarkets. The chains have been demanding sizable discounts but you do not want to drop your prices to the specialty stores. How can you legally accommodate the chains without losing profits from the specialty stores?14-4 Microwave OvensA manufacturer of microwaves has discovered that male shoppers have little value for microwaves and attribute almost no extra value to an auto-defrost feature. Female shoppers generally value microwaves more than men and attribute greater value to the auto-defrost feature. There is little additional cost to incorporating an autodefrost feature. Since men and women cannot be charged different prices for the same product, the manufacturer is considering introducing two different models. The manufacturer has determined that men value a simple microwave at $70 and one with auto-defrost at $80 while women value a simple microwave at $80 and one with autodefrost at $150. If there is an equal number of men and women, what pricing strategy will yield the greatest revenue? What if women compromise the bulk of microwave shoppers?14-5 Music PricingThe pricing model for iTunes has been to price songs individually. Instead, Pandora opted to offer unlimited song playing for a monthly fee.Would Pandora’s pricing model likely yield more profit than pricing songs individually?14-6 BundlingAt a student café, there are equal numbers of two types of customers with the following values. The café owner cannot distinguish between the two types of students because many students without early classes arrive early anyway (i.e., she cannot price discriminate).Students with Early ClassesStudents without Early ClassesCoffee7060Banana50100The MC of coffee is 10. The MC of a banana is 40. Is bundling more profitable than selling separately? If so, what price should be charged for the bundle?Short Answer Key14-1 Barbie Dolls and AccessoriesThis is a form of metering or “giving away the razor to sell the blades.” Consumers differ in their willingness to pay for “the Barbie experience.” Those who value it a lot are probably going to purchase more accessories than those who value it less. Purchases of accessories then ‘meter’ consumers’ willingness-to-pay for the experience. A higher margin for the accessories allows Mattel to extract more of the surplus from the high types without losing the low types.14-2 German BrothelsThis is a bundling mechanism. Traditionally, prices have a profit margin in them in which price exceeds marginal cost. This means that there are unconsummated transactions that represent a valuecreating opportunity. By pricing each visit at marginal cost, you increase usage and, therefore, 46
We have textbook solutions for you!
The document you are viewing contains questions related to this textbook.
Mathematics for Elementary School Teachers
The document you are viewing contains questions related to this textbook.
Chapter 7 / Exercise 61
Mathematics for Elementary School Teachers
Bassarear
Expert Verified
consumer surplus. The monthly subscription charge is meant to capture some of this additional consumer surplus.

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture