Author Question: Your company sells health food products, and you have recently developed a new high-protein drink ... (Read 33 times)

erika

  • Hero Member
  • *****
  • Posts: 522
Your company sells health food products, and you have recently developed a new high-protein drink (HPD) as well as a high-carbohydrate energy bar (HCE).
 
  As the product manager for the firm, you are responsible for setting the pricing policy for the new products. You are considering a bundled package that includes both products, and you assume the marginal cost of production is zero for planning purposes. You have identified four basic types of consumers who may buy these new products, and their reservation prices for the two new products are provided in the following table: Type HPD HCE A 0.50 1.80 B 0.80 1.10 C 1.00 0.90 D 1.40 0.30 a. Suppose you sell the two products separately, and each buyer is expected to purchase one unit of the product per day. Which prices for HPD and HCE maximize daily revenue? What is your daily revenue from selling both products to the four customers under separate pricing? b. If you offer the two products under a pure bundling strategy, what is the revenue maximizing bundle price? What is the daily sales revenue from the pure bundling scheme? c. Please develop a mixed bundling strategy that generates higher daily sales revenue than the pure bundling strategy. What is the daily sales revenue generated under mixed bundling?

Question 2

Refer to Figure 9.6. The government policy pictured is
 
  A) a price ceiling of 20.
  B) a price support of 20.
  C) a price ceiling of 15.
  D) a price support of 15.
  E) A quota of 600.



tashiedavis420

  • Sr. Member
  • ****
  • Posts: 329
Answer to Question 1

a.
For HPD, you sell one unit at 1.40 (TR = 1.40), two units at 1.00 (TR = 2.00), three units at 0.80 (TR = 2.40), and four units at 0.50 (TR = 2.00). So, the maximum daily sales revenue is generated at the 0.80 price. For HCE, you sell one unit at 1.80 (TR = 1.80), two units at 1.10 (TR = 2.20), three units at 0.90 (TR = 2.70), and four units at 0.30 (TR = 1.20). So, the maximum daily sales revenue is generated at the 0.90 price, and the total revenue earned from selling both products separately is 5.10.

b.
Under a pure bundling strategy, you would sell one package at 2.30 (TR = 2.30 ), three packages at 1.90 (TR = 5.70), and four packages at 1.70 (TR = 6.80). So, the pure bundling strategy with package price 1.70 is best and generates higher daily sales revenue than the separate pricing strategy.

c.
For example, suppose you sell HPD at 1.40, HCE at 1.80, and the bundled package at 1.90. In this case, customers A-C purchase the bundle (TR = 5.70 ) and customer D buys HPD only (TR = 1.40 ), and the total daily sales revenue is 7.10.

Answer to Question 2

B



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

In the ancient and medieval periods, dysentery killed about ? of all babies before they reach 12 months of age. The disease was transferred through contaminated drinking water, because there was no way to adequately dispose of sewage, which contaminated the water.

Did you know?

The Babylonians wrote numbers in a system that used 60 as the base value rather than the number 10. They did not have a symbol for "zero."

Did you know?

Always store hazardous household chemicals in their original containers out of reach of children. These include bleach, paint, strippers and products containing turpentine, garden chemicals, oven cleaners, fondue fuels, nail polish, and nail polish remover.

Did you know?

Vaccines prevent between 2.5 and 4 million deaths every year.

Did you know?

Addicts to opiates often avoid treatment because they are afraid of withdrawal. Though unpleasant, with proper management, withdrawal is rarely fatal and passes relatively quickly.

For a complete list of videos, visit our video library