Business, 10.03.2020 18:07, vlactawhalm29
To examine pricing decisions regarding your new gutter-cleaner (a nozzle that attaches to a hose and allows you to clean out gutters from the ground), suppose you survey 1000 consumers selected at random. To each consumer, you exhibit the product. For 500 consumers you offer the product at $20, for the other 500, you offer the product at $25. The results are that 250 of the $25 consumers buy and 300 of the $20 consumers buy. Suppose your marginal costs of production are $5 per cleaner.
(a) What price would you charge? Be sure to consider prices other than $20 and $25. You can assume that the demand curve is linear. (Note: you do not need a computer to perform "regression" analysis here – with these two observed points, you should be able to manually compute the slope and intercept of the demand curve you are facing)
(b) Would you want to do additional consumer surveys? Why or why not?
Answers: 3
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To examine pricing decisions regarding your new gutter-cleaner (a nozzle that attaches to a hose and...
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