A local store estimates its typical customer's inverse demand is P=6.07−2.1Q, and it knows the marginal cost of each rental is $0.64. How much will they sell to each customer it engages in optimal two-part pricing? (use decimals) Answer:

Answers

Answer 1

Answer: To find the optimal quantity to sell to each customer in a two-part pricing strategy, we need to calculate the quantity at which marginal cost equals the marginal revenue. In this case, the marginal cost is given as $0.64 and the inverse demand equation is $P = 6.07 - 2.1Q$.

Marginal cost ($MC$) equals marginal revenue ($MR$) when the quantity ($Q$) sold to each customer is such that $MC = MR$.

Given that $MC = 0.64$, we need to solve for $Q$ when $MR = P$:

\[MR = P\]
\[MR = 6.07 - 2.1Q\]

Set $MC$ equal to $MR$:

\[0.64 = 6.07 - 2.1Q\]

Now, solve for $Q$:

\[2.1Q = 6.07 - 0.64\]
\[Q = \frac{6.07 - 0.64}{2.1}\]

Calculate the value of $Q$ to find the optimal quantity to sell to each customer:

\[Q \approx 2.559\]

So, the store will sell approximately 2.559 units to each customer in optimal two-part pricing.

Answer 2

Answer:

Final answer:

The store will sell approximately 2.586 units to each customer it engages in optimal two-part pricing.

Explanation:

To determine the optimal quantity to sell to each customer using two-part pricing, we need to maximize the store's profit. The profit can be calculated as the difference between the total revenue and the total cost.

The total revenue is given by the product of the price (P) and the quantity sold (Q):

Total Revenue = P * Q

The total cost is the sum of the fixed cost (the fixed fee) and the variable cost (the variable fee based on the quantity sold). In this case, the fixed cost is not given, so we can assume it to be zero.

The variable cost is the product of the marginal cost per rental and the quantity sold:

Variable Cost = Marginal Cost * Q

To maximize profit, we need to find the quantity that maximizes the difference between total revenue and total cost.

Let's differentiate the profit function with respect to Q and set it equal to zero to find the critical point:

d(Profit)/dQ = d(Total Revenue)/dQ - d(Total Cost)/dQ = 0

Since the fixed cost is assumed to be zero, the derivative of the total cost with respect to Q is equal to the derivative of the variable cost with respect to Q, which is the marginal cost:

d(Total Cost)/dQ = Marginal Cost

Now, let's differentiate the total revenue function with respect to Q:

d(Total Revenue)/dQ = d(P * Q)/dQ = P

Setting the derivative of profit equal to zero:

P - Marginal Cost = 0

Substituting the given values:

6.07 - 2.1Q - 0.64 = 0

Simplifying the equation:

5.43 - 2.1Q = 0

Subtracting 5.43 from both sides:

-2.1Q = -5.43

Dividing both sides by -2.1:

Q = 2.586

Therefore, the optimal quantity to sell to each customer using optimal two-part pricing is approximately 2.586.

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Answers

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What do you mean by Secondary Research?

Secondary research mainly talks about the research involvement and coalition or the synthesis of existing research. Secondary research is beneficial nowadays for students. Especially those who are working continuously for their doctorate degrees or Mphil degrees. Since, the availability of Secondary Research is so in abundance, researching any particular thing is not a problem.

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Which of the following is an example of secondary research?

A. Observing reactions to free samples

B. Gathering statistics online

C. Hiring a marketing firm

D. Conducting trial-and-error testing

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The Commerce Ministry of a country conducts regular surveys on goods and services sold within the country. Researchers at the Ministry study consumer behavior through the choices the consumers make while deciding what to buy. Their report on the industry for beverages last year indicated that the price elasticity of demand for fruit juices in the country was -0.8, while the price elasticity of demand for a particular brand called Fruit Drops was-1.2. According to the report, an average consumer spends about 1 percent of his monthly income on fruit juices. A student ofeconomics, Julio, however feels that the current price elasticity of demand for Fruit Drops is actually higher than -1.2, based on his own experience in purchasing fruit juices. Which of thefollowing, if true, would support Julio's view that the price elasticity of demand for Fruit Drops is higher?A. The average income level of consumers has increased this year as compared to last year.B. The company that manufactures Fruit Drops also produces a variety of other goods.C. Three new brands have been introduced in the market for fruit juices in the last month.D. The management of one of the leading competitors of Fruit Drops was recently accused of manipulating profit figures.E. Fruit Drops is a very popular brand of fruit juice in this country.

Answers

Answer:

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d) It does not have any effect on the cost of the good.
2.
What does new technology generally do to production?
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Answers

1. With the rise in the cost of machinery or raw materials, the good becomes more expensive to produce. So the correct option for this question is option “c”. The cost of machinery and raw materials are directly proportional to the increase in cost of any goods.
2. The introduction or advent of new technology lowers cost and increases supply. So for this question the correct option is “b”. New technology always helps to increase the production with lowering of cost and that is the reason behind adopting new technology.

Answer:

b) It lowers cost and increases supply.

Explanation:

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