N1 Printing Solutions, the maker of the printer Blackink, faces an important product design dilemma: deciding the
Question:
N1
Printing Solutions, the maker of the printer Blackink, faces an important product design dilemma: deciding the speed of its popular laser printer. There are two market segments: Professionals are willing to pay up to $800*(a -0. 5) for the printer, where a is printer speed. Students, in turn, are willing to pay up to $100a. Maximum printer speed corresponds to a = 1, whereas a = 0 corresponds to a worthless printer. There are one million professionals and one million students. It is equally costly to produce a printer with any level of a. In fact, other than the initial development costs, production costs are zero. How many versions of the Blackink should Printing Solutions sell? Which versions? What are the optimal prices of each version?