If you are the curator of a museum that charges a fee to enter and your boss want you to increase revenue, what price change do you make: lower the price, raise the price, levy a user fee, improve profits

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Nelly StrackeLv2

10 Jan 2019

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You have been asked by your boss to report on the expected profits from a single price strategy compared with a twoâpart pricing strategy. The estimated demand for the firmâs product is: Qd= 400 - 0.2PPer unit cost is estimated as constant at $1,000.00. Provide a report which explains the profits from a single price profit maximizing strategy with a twoâ part profit maximizing strategy involving a fixed fee plus a per unit fee. Assume that total fixed cost is $30,000. What is the optimal fixed fee? Why does the twoâ part pricing policy increase total profits?

carmineraccoon103

1. What is meant by "price elasticity" of demand? Suppose the price elasticity of demand for used cars is estimated to be 1.5. What does this mean in term of responsiveness of demand? Discuss

Discuss. Don't simply give your answer.

Use grading rubrics:

a. Define the term

b. Offer an example

c. Next, explain

d. Try to relate the concept to previous work/assignment(s)

2. You are on the Board of Bronx Museum with the responsibility to raise admission fees for the Museum. You would recommend increasing the admission price only if you thought the demand curve for the Bronx Museum was:

a. Inelastic

b. Elastic

c. Unitary elastic

d. Perfectly elastic

Discuss. Don't simply give your answer. Defend your choice from the perspective of a Manager.

Question: Your Boss wants to increase total revenue by 15%. Your staff economist has estimated that the price elasticity is 0.8. Should the company raise or lower its prices and by how much to affect a 15% revenue increase?

**** I came up with 18.75% for the answer which is not correct according to my teacher. My teacher states the answer is 75%

He uses the formula below

TR=percentage change in P + percentage change in Q. You must re-write the equation in terms of the percentage change in P and substitute in all the know data and solve. Hint use the elasticity formula (teacher)