Nazar restaurant makes a market analysis to find out that the minimum willingness-to- pay (wtp) for...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Nazar restaurant makes a market analysis to find out that the minimum willingness-to- pay (wtp) for the lunch is $2.5 and maximum wtp is $12.5. Suppose that the wtp is uniformly distributed between these limits, that there are 100 lunch customers considering to go to the Nazar restaurant and that the cost of the lunch is $5. a) (0.5 pts) The restaurant classifies anybody with wtp more than $8.5 as a high-paying customer. The rest are considered low-paying customers. The restaurant will offer a la cart service to high-paying customers and a lunch buffet to low-paying customers. Let d₁, d₂ denote the demand of high-paying and low-paying customers, obtain the demand functions di(p) and d₂(p) for 2.5 ≤p ≤ 12.5. b) (0.5 pts) If you are told that the demand functions are: d₁(p) = min {50, 125 - 10p} d₂(p) = (75-10p)+ at what level of wtp (i.e., at what value of v) is the market split in to high- and low-paying customers? (Note that this number was v=7 on your slides. Try to use minimum value of demand and demand function to obtain the new value of v.) Then, find the optimal prices p₁* and p₂* to charge for the markets specified. c) (0.5 pts) What is the total profit when Nazar charges p₁ = 9 and p2 = 6 in the markets specified in part b. Nazar restaurant makes a market analysis to find out that the minimum willingness-to- pay (wtp) for the lunch is $2.5 and maximum wtp is $12.5. Suppose that the wtp is uniformly distributed between these limits, that there are 100 lunch customers considering to go to the Nazar restaurant and that the cost of the lunch is $5. a) (0.5 pts) The restaurant classifies anybody with wtp more than $8.5 as a high-paying customer. The rest are considered low-paying customers. The restaurant will offer a la cart service to high-paying customers and a lunch buffet to low-paying customers. Let d₁, d₂ denote the demand of high-paying and low-paying customers, obtain the demand functions di(p) and d₂(p) for 2.5 ≤p ≤ 12.5. b) (0.5 pts) If you are told that the demand functions are: d₁(p) = min {50, 125 - 10p} d₂(p) = (75-10p)+ at what level of wtp (i.e., at what value of v) is the market split in to high- and low-paying customers? (Note that this number was v=7 on your slides. Try to use minimum value of demand and demand function to obtain the new value of v.) Then, find the optimal prices p₁* and p₂* to charge for the markets specified. c) (0.5 pts) What is the total profit when Nazar charges p₁ = 9 and p2 = 6 in the markets specified in part b.
Expert Answer:
Answer rating: 100% (QA)
a The demand function for high paying customers is d p min 50 125 10 p The demand function for l... View the full answer
Related Book For
Accounting concepts and applications
ISBN: 978-0538745482
11th Edition
Authors: Albrecht Stice, Stice Swain
Posted Date:
Students also viewed these accounting questions
-
The summarized statements for the year ended 31 December 2007 for Mat, Rug and P entities are as follows: Statements of comprehensive income for the year ended 31 December 2007 The following...
-
When Ibuprofen is given for fever to children 6 months of age up to 2 years, the total dose is 5 milligrams (mg) per kilograms (kg) of body weight when the fever is under 102.5 F. How much medicine...
-
In preparing the financial statements for the year ended 31 December 20X5 Alpha plc discovers the following, all of which are material in the context of the company's results: Development...
-
Table # 11.1.1: Autism Versus Breastfeeding Breast Feeding Timelines Autism Yes No None 241 20 Column Total 261 Less than 2 months 198 25 223 2 to 6 months 164 27 191 More than 6 months 215 44 259...
-
How can TV be best used in an integrated marketing communications program?
-
In problem write each function in terms of unit step functions. Find the Laplace transform of the given function. [2, f(t) 1-2, 0
-
In a test of H0: p1 = p2 versus H1: p1 p2, the value of the test statistic is z = 1.21. What do you conclude about the difference p1 p2 at the ???? = 0.05 level of significance?
-
Johns Cream Soda, Inc., makes specialty soft drinks. At the end of 2012, Johns had total assets of $390,000 and liabilities totaling $260,000. Requirements 1. Write the companys accounting equation,...
-
According to Thomson et al (2014) what the two factor that influence competitive strategy?
-
Forrest runs Y Not Flowers, Inc. (YNF), a wholesale flower distributor with stores in several major metropolitan areas of the U.S. He is considering expanding his business, but he thinks his current...
-
You are the Chief Operating Officer (COO) of an electrical appliances company, Sung-Sam. Currently you are considering replacing the existing old assembly line with a new one in order to boost the...
-
What are reference groups and what is their role in influencing the buying process?
-
What are the impacts of taxes and depreciation on net income and cash flow?
-
a. What are the primary characteristics of managed care plans? b. Describe different types of managed care plans.
-
What are the three major relationship challenges prevalent in information-age selling, and how might these challenges be addressed by salespeople?
-
Which of the following chronic deficit conditions is least alarming to the deficit country's creditors? A. High consumption B. High private investment C. High government spending
-
Which sequences of paths are explored by BFS and DFS in this problem? Exercise 2 Given the graph represented in t Figure 1, where n, is the initial state, n, is the final state, each edge nn' is...
-
Consider the activities undertaken by a medical clinic in your area. Required 1. Do you consider a job order cost accounting system appropriate for the clinic? 2. Identify as many factors as possible...
-
Below is a listing of account balances taken from the adjusted ledger account balances of Jolley Manufacturing Corporation. All revenues and expense accounts have been closed to Retained Earnings....
-
Manwill Company owns 40% (30,000 shares) of Hall Companys voting stock. Since Manwill has a significant interest in Hall, it uses the equity method of accounting for the investment. Hall reported the...
-
Kellman Company is considering eight capital investment projects. Kellman has a minimum required internal rate of return of 13%. Screen and rank the eight capital investment projects using the...
-
Give five reasons why fraudulent financial reporting is committed.
-
What type of audit report should the auditor issue if a material fraud is detected and the financial statements are not revised?
-
Which of the following statements best describes an auditor's responsibility to detect errors and fraud? a. The auditor should study and evaluate the client's internal control, and design the audit...
Study smarter with the SolutionInn App