Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

how do you solve b & c? Styles Clipboard Font watched per month 1st Movie 2nd Movie 3rd Movie 4th Movie Customer 1 16 12

how do you solve b & c?
image text in transcribed
Styles Clipboard Font watched per month 1st Movie 2nd Movie 3rd Movie 4th Movie Customer 1 16 12 9 8 Paragraph Customer 2 16 11 10 5 Customer 3 15 12 10 5 a. If Sansa were to charge one single price, what is the optimal price she should charge? (2 points) b. If Sansa were to design a 2-block pricing, that is charge P1 for each of the first 2 movies, followed by a lower price of P2 for each of the next 2 movies, what are the optimal P1 and P2, and the resultant profits? Assume that for each movie, customers will only purchase if the price is equal to or less than the WTP. (2 points) c. If Sansa were to design a 4-block pricing, that is, charge P1 for the first movie, followed by a lower price of P2 for the second movie, followed by a lower price of P3 for the third movie, and finally a lower P4 for the fourth movie, what are the optimal P1, P2, P3 and P4, and the resultant profits? Assume that for each movie, customers will only purchase if the price is equal to or less than the WTP. (2 points) Styles Clipboard Font watched per month 1st Movie 2nd Movie 3rd Movie 4th Movie Customer 1 16 12 9 8 Paragraph Customer 2 16 11 10 5 Customer 3 15 12 10 5 a. If Sansa were to charge one single price, what is the optimal price she should charge? (2 points) b. If Sansa were to design a 2-block pricing, that is charge P1 for each of the first 2 movies, followed by a lower price of P2 for each of the next 2 movies, what are the optimal P1 and P2, and the resultant profits? Assume that for each movie, customers will only purchase if the price is equal to or less than the WTP. (2 points) c. If Sansa were to design a 4-block pricing, that is, charge P1 for the first movie, followed by a lower price of P2 for the second movie, followed by a lower price of P3 for the third movie, and finally a lower P4 for the fourth movie, what are the optimal P1, P2, P3 and P4, and the resultant profits? Assume that for each movie, customers will only purchase if the price is equal to or less than the WTP. (2 points)

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

Essentials Of Investments

Authors: Zvi Bodie, Alex Kane, Alan J. Marcus

12th Edition

1260772160, 978-1260772166

More Books

Students also viewed these Finance questions