Chapter 84. Pricing products by using tie-ins
Winston, Wayne (2014-01-15). Microsoft Excel 2013 Data Analysis and Business Modeling: Data Analysis and Business Modeling (Introducing) (p. 791). Pearson Education. Kindle Edition.
In all the following problems, assume a linear demand curve.
Do both exercises in excel
You are trying to determine the profit-maximizing price for a video game console. Currently, you are charging $ 180 and selling 2 million consoles per year. It costs $ 150 to produce a console, and price elasticity of demand for consoles is 3. What price should you charge for a console?
Now assume that, on average, a purchaser of your video game console buys 10 video games, and you earn $ 10 profit on each video game. What is the correct price for consoles?
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