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Question 2 SOS (Sounds of Silence, Inc) prepares tO launch a revolutionary system of bluetoothenabled noise-cancellation headphones. It is estimated that about 800,000 consumers would
Question 2 SOS (Sounds of Silence, Inc) prepares tO launch a revolutionary system of bluetoothenabled noise-cancellation headphones. It is estimated that about 800,000 consumers would be willing to pay $450 for the headphones; an additional 1,500,000 consumers would be willing to pay $250 for the headphones. Though SOS knows this marketing information, it cannot identify a consumer as belonging to one group or the other. SOS is considering the launch of a strippeddown version Of the headphones (the stripped down version uses wires instead of bluetooth). The 800,000 high-valuation consumers would only be willing to pay $325 for the stripped-down version. The remaining 1,500,000 con- sumers don't particularly care about bluetooth vs. wire connections; they are willing to pay the same $250 for either version. Both the bluetooth version and the strippeddown version cost the same to produce: $100 per unit. 1. Determine the optimal pricing policy assuming that SOS only sells bluetoothenabled headphones. 2. Determine the Optimal pricing policy assuming that SOS offers the two versions. 3. Suppose that SOS nds out that the estimate regarding the number of lowvaluation users is overly Optimistic. In fact, there are only 300,000 consumers who would be willing to pay $250. How would you change your answer to (a) and (b)
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