A cable company offers two basic packages: sports and kids, and a combined package. There are three
Question:
A cable company offers two basic packages: sports and kids, and a combined package. There are three different types of users: parents, sports fans, and generalists. The following table shows the maximum price that each type of consumer is willing to pay for each package.
Note:The maximum price that a consumer is willing to pay is also known as their reservation price.
Cable Company Reservation Price Index | ||
Sports Package | Kids Package | |
Parents | 15 | 50 |
Sports Fans | 50 | 5 |
Generalists | 40 | 40 |
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A cable company offers two basic packages: sports and kids, and a combined package. There are three different types of users: parents, sports fans, and generalists. The following table shows the maximum price that each type of consumer is willing to pay for each package.
Note:The maximum price that a consumer is willing to pay is also known as their reservation price.
Cable Company Reservation Price Index | ||
Sports Package | Kids Package | |
Parents | $15 | $50 |
Sports Fans | $50 | $5 |
Generalists | $40 | $40 |
Strategy 1: If the cable company charges $50 for the Kids Package and $50 for the Sports Package, what will each group purchase?
a) Parents will buy
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b) Sports fans will buy
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c) Generalists will buy
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Strategy 2: Now imagine that the cable company adds an additional combination Sports and Kids bundle for $60. What will each group purchase?
a) Parents will buy
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b) Sports fans will buy
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c) Generalists will buy
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Strategy 3: Lastly, imagine the cable company charges $80 for the combination package. What will each group purchase?
a) Parents will buy
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b) Sports fans will buy
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c) Generalists will buy
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Revenue:Assume there are 10 generalists, 10 sports fans, and 10 parents in the marketplace.
Which strategy generates the most revenue? Strategy Question Blank 10 of 11.
How much revenue does it generate? It generates $Question Blank 11 of 11 in revenue (round to the nearest dollar).
Expert Answer:
Answer Okay lets go through the questions stepbystep Strategy 1 If the cable company charges 50 for ... View the full answer
