Suppose you are the manager for Horizon, a telecommunication company. Market research has shown that the...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Suppose you are the manager for Horizon, a telecommunication company. Market research has shown that the demand by a typical customer for the product you sell (Q is a GB of data transfers) is given by: P = $5 -0.250 From your production department, you are told that the variable costs of production are given by: VC (Q) = $20 a. If you decide to offer the product for sale to all buyers at a single price, what price will you charge and how much will you sell to a typical customer? b. What profits per consumer will you earn under this pricing strategy? c. Now suppose you decide to use a simple block pricing strategy. What happens to revenues if you charge $4.25/GB for the first 3 GBs, $3.50/GB for the next 3 GBs and $2.50/GB for the next block of 4 GBs? d. What profits per consumer will the firm earn under this pricing strategy? e. Compare the profits under the two pricing strategies. Comment on the comparison. Suppose you are the manager for Horizon, a telecommunication company. Market research has shown that the demand by a typical customer for the product you sell (Q is a GB of data transfers) is given by: P = $5 -0.250 From your production department, you are told that the variable costs of production are given by: VC (Q) = $20 a. If you decide to offer the product for sale to all buyers at a single price, what price will you charge and how much will you sell to a typical customer? b. What profits per consumer will you earn under this pricing strategy? c. Now suppose you decide to use a simple block pricing strategy. What happens to revenues if you charge $4.25/GB for the first 3 GBs, $3.50/GB for the next 3 GBs and $2.50/GB for the next block of 4 GBs? d. What profits per consumer will the firm earn under this pricing strategy? e. Compare the profits under the two pricing strategies. Comment on the comparison.
Expert Answer:
Posted Date:
Students also viewed these economics questions
-
Micro Spinoffs Incorporated issued 20-year debt a year ago at par value with a coupon rate of 7%, paid annually. Today, the debt is selling at $1,160. If the firm's tax bracket is 21%, what is its...
-
"I'm not sure we should lay out $300,000 for that automated welding machine," said Jim Alder, president of the Superior Equipment Company. "That's a lot of money, and it would cost us $84,000 for...
-
The draft adjusted trial balance of Alberta Enterprises Ltd., a publicly quoted company, at December 31, 2021, is as follows: Debits Credits $ $ Cash 410,000 Accounts receivable 1,030,000 Allowance...
-
What has motivated you most since accepting your Omega Nu Lambda nomination to grow in your career development? Give an example
-
A random sample of 10 speed skaters, all of the relatively same experience and speed, were selected to try out a new specialty blade.The difference in the short track times were measured as current...
-
Pratt Company acquired all of Spider, Inc.s outstanding shares on December 31, 2011, for $495,000 cash. Pratt will operate Spider as a wholly owned subsidiary with a separate legal and accounting...
-
J. Awn, the proprietor of Awn Services, withdrew \($8,700\) from the business during the current year. The entry to close the withdrawals account at the end of the year is a. J. Awn, Withdrawals Cash...
-
Joseph Gonzales recently bought a new business that included a small 20-room motel and coffee shop. He hired a young couple to run the business and plans to pay them a monthly salary. The couple will...
-
A doctor prescribed Coreg 8250 mcg PO b.i.d. Available Coreg tablets labeled as 4.125 mg per tablet.How tablets will patient receive per dose? Use appropriate unit abbreviation. How many milligrams...
-
Question 1 (34 marks) The new managing director (MD) of Laser & Tiger Ltd has asked you to analyse and give your views on the relative profitability and liquidity. The following summarised financial...
-
Juliet B a partner in Tickitt & Run, Registered Auditors, receives a telephone call from the managing director of Chateaubriand Ltd which runs a chain of restaurants and bars. They wish to appoint...
-
Down Market Department Stores PLC sell a high proportion of their merchandise on hire purchase (HP). The system for dealing with HP sales is highly organized and well controlled. The HP receivables...
-
You are the manager responsible for prospective new clients and you have visited Bolington Publishing PLC which publishes a small range of fiction paperbacks. The chief executive is Daniel Dunbar and...
-
Harrier Motors deals in motor vehicles, sells spare parts, provides after-sales servicing and undertakes car body repairs. During the financial year to 30 June 2X11, the company expanded its...
-
Polls are to be conducted in two cities to determine the difference in the proportions of residents who believe that the economy will improve over the next year. A 95% confidence interval will be...
-
In light of a string of recent and highly publicised audit failures in the UK, the management of Honest raised serious concerns about the quality and usefulness of the External Audit. REQUIRED: In...
-
Read the following description and Write a response of it. The discretion of public administrators can be decreased, but not altogether eliminated. Officials will use their discretion in any given...
-
At the end of the year, Siri Company's accounts showed a \(\$ 50,000\) debit balance in Manufacturing Overhead Control. In addition, the company had the following account balances: a. Prepare the...
-
Northwest Inc. has gathered the following data on the number of shipments received and the cost of receiving reports for the first seven weeks of the year. a. Using the high-low method, develop the...
-
Alterations Inc. provides a variety of clothing alterations. Analysis of monthly costs revealed the following cost formulas when direct labor hours are used as the basis of cost determination:...
Study smarter with the SolutionInn App