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...
-
The proportions of the disk in Fig. 49 that are orange and blue are 1/2 and 1/3, respectively. Find the proportion of the disk that is yellow. -/2
-
Evaluate the integral. (arcsin x)? dx
-
Explain the difference between a deferred tax liability and a deferred tax asset.
-
Target operating income, value-added costs, service company. Calvert Associates prepares architectural drawings to conform to local structural-safety codes. Its income statement for 2012 is as...
-
Need an answer.... Tiffany is unmarried and has a 15-year-old qualifying child. Tiffany has determined her tax liability to be $3,525, and her employer has withheld $1,500 of federal taxes from her...
-
Reconsider the Fly-Right Airplane Co. problem introduced in Prob. 12.3-7. A more detailed analysis of the various cost and revenue factors now has revealed that the potential profit from producing...
-
Write How would you ensure that your databases were set to the highest possible standards of security which covers following topics. 1) Explain Database security breach types 2) Database backup...
-
Suppose you have three jobs waiting to be completed, and you must determine the sequence in which these jobs should be worked on. You calculated the critical ratio for each of the jobs and the...
-
Suppose you have three jobs waiting to be completed, and you must determine the sequence in which these jobs should be worked on. You calculated the critical ratio for each of the jobs and the...
-
Consider the following three jobs: Job Alpha requires 2 weeks of work and is due in 4 weeks. Job Beta requires 3 weeks of work and is due in 5 weeks. Job Carlos requires 1 week of work and is due in...
-
Job Victor requires 8 weeks of work and job Tango requires 2 weeks of work. If job Victor is completed first and job Tango is completed next, what is the tardiness for job Tango if it is due in 4...
-
What is COSO and how does it assist risk management?
-
The Aleutian Company produces two products, Rings and Dings.They are manufactured in two departments??Fabrication and Assembly.Data for the products and departments are listed below.Product 2 answers
-
An access route is being constructed across a field (Figure Q8). Apart from a relatively firm strip of ground alongside the field's longer side AB, the ground is generally marshy. The route can...
-
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...
-
A The following balance sheets of P Ltd and S Ltd were drawn up as at 31 December 19X4. Draw up the consolidated balance sheet as at that date. P Balance Sheet as at 31 December 19X4 Investment in...
-
Draw up a consolidated balance sheet as at 31 December \(19 \times 9\) from the following information. Investment in subsidiary: 30,000 shares bought 31.12.19X8 Fixed assets Current assets Share...
-
A The balance sheets of P Ltd and S$ Ltd are as follows: Investment in subsidiary: 120,000 shares bought 31.12.19X3 Fixed assets Current assets Share capital Profit and loss account: As at 31.12.19X3...
Study smarter with the SolutionInn App