Question

Now, how much to charge for the bicycle? Boone's factory could produce the bicycle at a marginal cost of $1,000. Boone hired a consultant to run some focus groups. The consultant found that customers came in two groups: A and B. Each group had a different willingness to pay for the bicycle, and there were different numbers of consumers in each group, as listed in the table below: Group Willingness to Pay Number of Consumers A $5,000 10 B $3,000 2 Boone sat back, scratched his head, and studied this table. The table implied that if he set a price of $1,200 for the bicycle, groups A and B together would buy it. But that was just one option: he could choose any price he wanted. Hint: You cannot use the markup rule directly to solve this problem, because the demand curve is not smooth. Instead, calculate Boone's profits for different prices, and then choose the price that gives him the greatest profit. You do not need to graph a demand curve to solve this problem, but it can help you understand the implications. Question 1 At Boone's profit-maximizing choice of price, his revenue will be $Blank 1. Note: Use only whole numbers in your answer. If needed, round to the nearest whole number. Do not enter letters or words. Blank 1 Boone was relieved to have finally settled on a price. He celebrated with a bottle of medicated shampoo and took the weekend off. But the next week, another decision awaited him at the office. Boone wanted to sell the bike not just in the United States, but also in the separate market for bicycles in Japan. Boone again hired a consultant who studied the Japanese market for bicycles. The consultant came to the conclusion that the market for bicycles in Japan was just like the US market with only one difference: In Japan there were 15 consumers in group B. Question 2 At Boone's profit-maximizing choice of price for the Japanese market alone, his revenue will be $Blank 1. Note: Use only whole numbers in your answer. If needed, round to the nearest whole number. Do not enter letters or words. Blank 1

Now, how much to charge for the bicycle? Boone's factory could produce the bicycle at a marginal cost of $1,000. Boone hired a consultant to run some focus groups. The consultant found that customers came in two groups: A and B. Each group had a different willingness to pay for the bicycle, and there were different numbers of consumers in each group, as listed in the table below:

Group Willingness to Pay Number of Consumers
A $5,000 10
B $3,000 2

Boone sat back, scratched his head, and studied this table. The table implied that if he set a price of $1,200 for the bicycle, groups A and B together would buy it. But that was just one option: he could choose any price he wanted.

Hint: You cannot use the markup rule *directly* to solve this problem, because the demand curve is not smooth. Instead, calculate Boone's profits for different prices, and then choose the price that gives him the greatest profit. You do not need to graph a demand curve to solve this problem, but it can help you understand the implications.

Question 1
At Boone's profit-maximizing choice of price, his revenue will be $Blank 1.
Note: Use only whole numbers in your answer. If needed, round to the nearest whole number. Do not enter letters or words.
Blank 1

Boone was relieved to have finally settled on a price. He celebrated with a bottle of medicated shampoo and took the weekend off. But the next week, another decision awaited him at the office. Boone wanted to sell the bike not just in the United States, but also in the separate market for bicycles in Japan. Boone again hired a consultant who studied the Japanese market for bicycles.

The consultant came to the conclusion that the market for bicycles in Japan was just like the US market with only one difference: In Japan there were 15 consumers in group B.

Question 2
At Boone's profit-maximizing choice of price for the Japanese market alone, his revenue will be $Blank 1.
Note: Use only whole numbers in your answer. If needed, round to the nearest whole number. Do not enter letters or words.
Blank 1

Now, how much to charge for the bicycle? Boone's factory could produce the bicycle at a marginal cost of 1,000. Boone hired a consultant to run some focus groups. The consultant found that customers came in two groups: A and B. Each group had a different willingness to pay for the bicycle, and there were different numbers of consumers in each group, as listed in the table below:

Group Willingness to Pay Number of Consumers
A5,000 10
B 3,000 2

Boone sat back, scratched his head, and studied this table. The table implied that if he set a price of1,200 for the bicycle, groups A and B together would buy it. But that was just one option: he could choose any price he wanted.

Hint: You cannot use the markup rule *directly* to solve this problem, because the demand curve is not smooth. Instead, calculate Boone's profits for different prices, and then choose the price that gives him the greatest profit. You do not need to graph a demand curve to solve this problem, but it can help you understand the implications.

Question 1
At Boone's profit-maximizing choice of price, his revenue will be Blank 1.
Note: Use only whole numbers in your answer. If needed, round to the nearest whole number. Do not enter letters or words.
Blank 1

Boone was relieved to have finally settled on a price. He celebrated with a bottle of medicated shampoo and took the weekend off. But the next week, another decision awaited him at the office. Boone wanted to sell the bike not just in the United States, but also in the separate market for bicycles in Japan. Boone again hired a consultant who studied the Japanese market for bicycles.

The consultant came to the conclusion that the market for bicycles in Japan was just like the US market with only one difference: In Japan there were 15 consumers in group B.

Question 2
At Boone's profit-maximizing choice of price for the Japanese market alone, his revenue will beBlank 1.
Note: Use only whole numbers in your answer. If needed, round to the nearest whole number. Do not enter letters or words.
Blank 1

Added by -Ngel P.

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