A local video store estimates its typical customer's inverse demand is P = 9.4 - 1.1Q, and it knows the marginal cost of each rental is $ 0.95. (In all answers use up to two decimals.) Two-part pricing How much should the store charge for each rental if it engages in optimal two-part pricing? What is the fixed fee that they should charge it engages in optimal two-part pricing? $ How much producer surplus will they make on each customer if it engages in optimal two-part pricing? $ How many units will they sell to each customer? Block Pricing If they use block pricing instead, how many should they put in the package? What should they charge for the entire package?During spring break, students have an elasticity of demand for a trip to Florida of -3 The general public has an elasticity of -2. How much should an airline charge students for a ticket if the price it charges the general public is $ 463? P = $ What is the airline's marginal cost? MC = $Suppose two types of consumers buy suits. Consumers of type A will pay $100 for a coat and $50 for pants. Consumers of type B will pay $50 for a coat and $125 for pants. The firm selling suits faces no competition and has a marginal cost of zero. (When customers are indierent, they choose the option where they buy more clothing. ) If the firm charges $150 for a suit (which includes both pants and a coat), but does not sell pieces seprately, Which customgtypes will buy the suit? , A V if the firm charges $1 00' for the coat only and $100 for pants only, and does not sell the entire suit at a discount, Which customer types will buyithe coat? A V Which_customer types will buy the pants? 7 A V if the firm charges $100 for the coat only and $100 for pants only, and the suit for $150, Which option does Type A purchase? 0'0: Which option does Type B purchase? The following table contains different consumers' values for three software titles: PowerPoint, Excel, and Word. Suppose there are 100 consumers of each type. It costs Microsoft $0 to produce each piece of software. Consumer Types PowerPoint Excel Word Administrative Assistants 75 100 200 Marketing/Sales 200 100 125 Accountants 25 250 25 When customers are indifferent, they choose the option where they buy more software. A la carte Pricing If Microsoft were to sell each of the software individually, what price should it set for each and what would its profits on each be? PowerPoint Excel Word Price per each Profit on just that software Total profit on all software: $ Bundled Pricing If Microsoft were to only sell the three products as a bundle, what price should they set for bundle? $ what would be the profits?$ Mixed Pricing Suppose that Microsoft offered a bundle of all three for $375, but it also offers a price of $200 for each software separately. What is the new profit level for this pricing scheme? $If your annual demand for renting videos is P = 9.7 - 2Q, If purchasing an membership guarantees that you can rent as movies as you like for $ 0.4 per video. How many movies will you rent per year? What is the most that you will pay the annual membership?l 5 The following chart tells you the willingness to pay (WT P) for generic and custom f refrigerators for three types and the number of each type on your market. We assume that customers buy (or upgrade) when they are indifferent. Each refrigerator costs $150 to make the generic and $170 to make the custom. # of each type Value for generic Total value for Custom High Value 20 400 500 ' Medium Value 30 230 300 Low Value 20 100 140 If you were only to sell the generic refrigerator, what price should you set? $ . What are the profits if selling just the generic? $ ' If you were to keep that price for the generic and sell the sell the custom refrigerator to only the highest type, what price should you set for the custom refrigerator? $ A firm's individual demand for good x satisfies, InQx = 73 - 7.6lnPx + 1.9lnPy + 1.51lnM + 1.3lnAx. Qx is quantity of X, Py is the price of X, Py is the price of Y, a related good, A is advertising and M is income level. If the marginal cost of producing X is $103.55, what price should they set to maximize profits? P = $You are the manager of a gas station and your goal is to maximize profits. Based on your past experience, the elasticity of demand by Texans for a car wash is -2, while the elasticity of demand by non-Texans for a car wash is -2.2. If you charge Texans PTX =$26 for a car wash, what is the marginal cost of giving a car wash? (give me 2 decimal places) MC = $ How much should you charge a man with Oklahoma license plates for a car wash? POK = $