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If a firm is selling a product in two markets, A and B, and the marginal revenue in A is $25 and the marginal revenue in B is $20, the firm should a....

This question was answered on Aug 29, 2012. View the Answer
1. If a firm is selling a product in two markets, A and B, and the marginal
revenue in A is $25 and the marginal revenue in B is $20, the firm should
a. charge a higher price in A where MR is higher
b. charge a lower price in B where MR is lower
c. sell more in B and less in A
d. sell more in A and less in B

2. The wildTime Bar offers female patrons a lower price for a dring that
male patrons. The bar will maximize profit by selling a total of 200 drinks
per night. At the current price prices male customers buy 150 drinks,
while female customers buy 50 drinks. The marginal revenue from the
last drink sold to a male customer is $1.50, and while teh marginal
revenue form the last marginal revenue from the last drink sold to a
female customer is $0.50
a. should lower the price for male customers and rasise the price for
female customers.
b. should lower the price for female customers and raise the price for
male customers
c. should charge the same price regardless of gender
d. is maximinzing profit, should keep selling $150 drinks to male
customers and 50 drinks to female customers.
3. Mega Media Cable Scenario: Mega Media Cable TV is able to purchase
an exclusive right to sell a premium sport channel in its market area. Let's
assume that Mega Media pays $100,000 a year for the exclusive
marketing rights to the sport channel. Since Mega Media has already
installed cable to all of th homes in its market area, the marginal cost of
delivering th sport channel to subscriber to Zero. The manager of Mega
Media needs to know what price to charge for the sports channel service
to maximize her profit. Before setting price, she hires an economist to
estimate demand for the sport channel. The economist discovers that
there are two types of subscribers who value premium sporting channels.
First are the 3,000 die-hard spots fan who will pay as much as $150 a
year for the new channel. Second, the premium sports channel will
appeal to about 20,000 occacional sports viewers who will pay as much
as $25 a year for a subscription to it.
a. price = $25; profit= $475,000
b. price= $25 ; profit=$350,000
c. price= $150; profit= $500,000
d. price= $150, profit = $400,000

4. Refer to the Mega Media Cable Scenario: If Mega Media Cable TV is able to price discriminate, what woudl be the maximum amount of profit it could generate?
a. $950,000
b. $850,000
c. $400,000
d. 350,000


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Economics-8344388.doc

1. If a firm is selling a product in two markets, A and B, and the marginal revenue in A is $25 and the marginal
revenue in B is $20, the firm should
a. charge a higher price in A where MR is...

This question was asked on Aug 28, 2012 and answered on Aug 29, 2012.

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