Monday, March 15, 2010

cs3265 midterm exam part 1

there are some queries i had for the midterm paper
but after dr.Chen explain
i suddenly feel that i should had studied the answers she gave
Below is the email i wrote to her -- for question number 1
_________________________________________________
Dear
Dr.Chen
Regarding the midterm paper, I do have a query in calculations.
Question 20.

Customer Type

PhotoKing

Individual pricing

VideoKing

Individual pricing

No. of customers WTP

total

No. of customers

WTP

total

A

$70

300

$21,000

$80

200

$16,000

B

$80

200

$16,000

$50

400

$20,000

C

$30

400

$12,000

$90

100

$9,000

D

$100

100

$10,000

$70

300

$21,000

So, from this we can deduce that both individual pricing should be $70.

The bundle pricing in this case have to be lower than $140. ($70 + $70)

Therefore taking the bundle pricing: $130

Type A, B & D customers would purchase

130 x 300 = 39,000

Type C customers would purchase only video king at $70

70 x 100 = $7,000

Total = $39,000 + $7,000 = $46,000

$120

All type of customers would purchase

120 x 400 = $48,000

Therefore if the firm sells both bundle and individual items, the price for the bundle to obtain maximum profit is $120.

Whereas the answer given by you is $130 instead, I wonder if there are errors in this calculations.
___________________________________________________________
okay, if what i said seems correct... then you are WRONG

her reply is below
___________________________________________________________

When the bundle is $130, only Type C consumers will purchase individual items at $30 for PhotoKing and $90 for VideoKing. The total revenue from individual item selling is $30x100+$90x100=$12000. Add this amount to the bundling selling revenue, total revenue =$39000+$12000=$51000.

The seller will not sell individual items at $70 to Type C consumers if they can get higher revenue.

___________________________________________________________
tada, sounds correct, i although i had weird feeling about the individual pricing...
but it is convincing in the end.

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