Question
Spotify is a music streaming service company that offers two different plans. The standard plan costs $150 per year and the premium plan is $250
Spotify is a music streaming service company that offers two different plans. The standard plan costs $150 per year and the premium plan is $250 a year. Suppose you are hired as a consultant to provide advice on 3rd degree pricing strategy. Spotify's estimate for marginal cost is $75. You are tasked with assessing what demand price elasticities that would rationalize Spotify's current pricing scheme as profit maximizing. That being said which of the following are true:
A. Values of -2 for the Standard service and -3.33 for the Premier service
B. Values of -4 for the Standard service and -2 for the Premier service
C. Values of -2 for the Standard service and -1.43 for the Premier service
D. Values of -1.43 for the Standard service and -2 for the Premier service
E. None of the above
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