#4

Seven years ago, you started a crosstown delivery service. You have two types of service. You have a small parcel service for anything that is flat and measures less than 11x17. You have a package service using a 100 lb. capacity bike trailer for anything weighing up to 10 lbs. Initially, you charged the same price for each service, but since the beginning of the Covid-19 pandemic, you have seen an increase in the demand for your package service. The demand for the package service seems to be more inelastic than the demand for parcels. You are now wondering if you should charge different prices for the parcel service and the package service, i.e. should you segment your market? Does segmentation increase profits?

Complete the table below for the combined market of parcels and packages. *DONE

Price	Parcels and Packages	TR	MR	TC	MC	MR-MC	Profit
100	50	5,000		1,600			3,400
90	120	10,800	83	2.300	10	73	8,500
80	190	15,200	63	3,000	10	53	12,200
70	260	18,200	43	3,700	10	33	14,500
60	330	19,800	23	4,400	10	13	15,400
50	400	20,000	3	5,100	10	-7	14,900
40	470	18,800	-17	5,800	10	-27	13,000
30	540	16,200	-37	6,500	10	-47	9,700
20	610	12,200	-57	7,200	10	-67	5,000
10	680	6,800	-77	7,900	10	-87	-1,100

#5

Complete the table below for the parcels market. *DONE

Price	Parcels	TR	MR	TC	MC	MR-MC	Profit
100	0	0		1,150			-1150
90	50	4,500	90	1,650	10	80	2,850
80	100	8,000	70	2,150	10	60	5,850
70	150	10,500	50	2,650	10	40	7,850
60	200	12,000	30	3,150	10	20	8,850
50	250	12,500	10	3,650	10	0	8,850
40	300	12,000	-10	4,150	10	-20	7,850
30	350	10,500	-30	4,650	10	-40	5,850
20	400	8,000	-50	5,150	10	-60	2,850
10	450	4,500	-70	5,650	10	-80	-1,150

#6

Complete the table below for the packages market. *DONE

Price	Packages	TR	MR	TC	MC	MR-MC	Profit
100	50	5,000		450			4,550
90	70	6,300	65	650	10	55	5,650
80	90	7,200	45	850	10	35	6,350
70	110	7,700	25	1,050	10	15	6,650
60	130	7,800	5	1,250	10	-5	6,550
50	150	7,500	-15	1,450	10	-25	6,050
40	170	6,800	-35	1,650	10	-45	5,150
30	190	5,700	-55	1,850	10	-65	3,850
20	210	4,200	-75	2,050	10	-85	2,150
10	230	2,300	-95	2,250	10	-105	50

QUESTION: Should the delivery service charge one price or will segmentation increase profits? Support your conclusion using the profits calculated in Questions 4, 5, & 6. Determine the maximum profit for the combined market, i.e. 1 price for both services, and show the maximum profit if the market is segmented into sub-markets for parcels and packages, charging 2 different prices.