3) Seven years ago, you started a cross-town delivery service. You have two types of delivery services. You have a small parcel service for anything that is flat and measures less than 11x17. You have a packing service using a 100 lb capacity bike trailer for anything weighing up to 10 lbs. Initially, you charged the same price for each service, but since the beginning of the Covid19 pandemic, you have seen an increase in the demand for your package service. The demand for package services seems to be more inelastic than the demand for parcels. You are now wondering if you should charge different prices for the parcel and package service or should you segment the market and charge two different prices?

Complete the tables below and determine the best price strategy: price the services differently in each segment; or continue the one price policy? What is the best pricing strategy? Demonstrate the difference in the profit from each strategy.

Transcribed Image Text:

Combined Parcels & Packages Price Parcels and Packages TR MR TC MC MR-MC Profit 100 50 1600 90 120 2300 190 3000 70 260 3700 330 4400 50 400 5100 40 470 5800 30 540 6500 20 610 7200 10 680 7900 688 888 8 888 Combined Parcels & Packages Price Parcels and Packages TR MR TC MC MR-MC Profit 100 50 1600 90 120 2300 190 3000 70 260 3700 330 4400 50 400 5100 40 470 5800 30 540 6500 20 610 7200 10 680 7900 688 888 8 888

Answer rating: 100% (QA)

A complete table for the combined market of parcels and packages is ... View the full answer