Question
Use the following information for the next two questions. Assume you are a massage therapist that would like to offer a volume discount to your
Use the following information for the next two questions.
Assume you are a massage therapist that would like to offer a volume discount to your customers. Also, assume all your customers have the same demand schedules. This means we can use a single customer to represent all of your customers. Your massage demand schedule is below. The numbers in the Q, MC, TR, MR and Profit columns are for when you charge a uniform price.
Massage Demand Schedule | |||||
Price | Quantity | Marginal Cost | Total Revenue | Marginal Revenue | Profit |
$90 | 1 | $25 | $90 | $90 | $65 |
$80 | 2 | $25 | $160 | $70 | $110 |
$70 | 3 | $25 | $210 | $50 | $135 |
$60 | 4 | $25 | $240 | $30 | $140 |
$50 | 5 | $25 | $250 | $10 | $125 |
$40 | 6 | $25 | $240 | -$10 | $90 |
$30 | 7 | $25 | $210 | -$30 | $35 |
$20 | 8 | $25 | $160 | -$50 | -$40 |
$10 | 9 | $25 | $90 | -$70 | -$135 |
What is the profit maximizing price if you charge a uniform price?
Hint: enter your answer without a $ sign.
Example: if the answer is $180, enter 180
What are 3 different pricing strategies (using strategies that we have learned about) that would give you a higher profit over charging a uniform price? What is your total profit for each strategy? Note that since your customers are identical you are limited in the types of price discrimination you can use. A hint is that you need to find a way to sell additional units (higher volume) and increase profits.
Be specific with numbers for your strategy. Also, each strategy needs to be different in its approach. This means you can't use the same basic strategy and then use different numbers for your three strategies.
the question needs to answer based on this market
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