Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Stata is an integrated software package used to satisfy data science needs, and is often used by college students and individuals in business. Stata offers

Stata is an integrated software package used to satisfy data science needs, and is often used by college students and individuals in business. Stata offers a "Stata/IC" version and a "Stata/SE" version of the software. The main difference is that Stata/SE allows for about 16 times more variables in general and about 14 times more explanatory variables in a model. The software has already been developed, so the marginal cost of another software license sold is zero. Suppose the average maximum willingness to pay for the two versions is summarized in the following table for the two groups:

Software Version Students Business Users
Stata/SE $180 $1,000
State/IC $100 $200

A)Suppose that based on this information, Stata decides to charge $1,000 for Stata/SE and $100 for Stata/IC. Why might this be a bad idea?

B) What price should Stata charge for each version in order to maximize profits?

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

Lectures On Urban Economics

Authors: Jan K Brueckner

1st Edition

0262300311, 9780262300315

More Books

Students also viewed these Economics questions