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A microwave manufacturer is considering introducing two different oven models, a simple version and one with an auto-defrost.

A microwave manufacturer is considering introducing two different oven models, a simple version and one with an auto-defrost. 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 auto-defrost at $150. Thus, men value the auto-defrost feature at $10 while women value this feature at $70. Answer the questions below assuming, for simplicity, there are two consumers - one man and one woman.

  • How much revenue would be earned by selling a single microwave (with auto-defrost) to both men and women?
  • How much revenue would be earned by selling a single microwave (with auto-defrost) only to women?
  • How much revenue would be earned by selling a simple microwave targeted to men and an auto-defrost version targeted to women? 
  • What pricing strategy yields the highest revenue?

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