Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

For questions 18 21 use the following information. Website Design Associates (WDA) provides website design services for small business. They have three types of potential

image text in transcribed
image text in transcribed
For questions 18 21 use the following information. "Website Design Associates" (WDA) provides website design services for small business. They have three types of potential customers: -Type 1: Small businesses without a need for secure online transactions Type 2: Small businesses with a need for secure online transactions, but no need for storage of customers' personal information Type 3: Small businesses with a need for both secure online transactions and storage of customers' personal information WDA's services come in three distinct versions: "Basic" : web design without secure online transactions "Intermediate" : web design with secure online transactions but no customer data storage "Extreme" : web design with secure online transactions and customer data storage All costs for Website Design Associates are relatively small and can be assumed to be zero. The marginal willingness to pay for the different customer types is given in the following table: Basic Upgrade to Upgrade to Intermediate Extreme Group Sizes Type 3 1,000 500 200 10 Type 2 700 100 100 20 Type 1 600 100 50 25 18. Suppose that Website Design Associates offers the following menu to all its customers: "Basic" for $500 "Intermediate" for $950 "Extreme" for $1,200 What does each Type 1 customer buy (if anything)? What is the total consumer surplus of all Type 1 customers? What does each Type 2 customer buy (if anything)? What is the total consumer surplus of all Type 2 customers? What does each Type 3 customer buy (if anything)? What is the total consumer surplus of all Type 3 customers

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Introductory Econometrics A Modern Approach

Authors: Jeffrey M. Wooldridge

2nd Edition

0324113641, 9780324113648

More Books

Students also viewed these Economics questions

Question

4. What is the goal of the others in the network?

Answered: 1 week ago

Question

2. What we can learn from the past

Answered: 1 week ago