Using the Same Information as Above,suppose You Can Set One

question 123

Multiple Choice

Using the same information as above,suppose you can set one price for MBA students and one price for EMBA students.However you know that MBA students are willing to resell the Primer to EMBA students for their purchase price plus $60.MBA students pay $x and they can resell the primer for $(x + 60) .Assuming there are no other cost involved in this transaction and it cannot be prevented.What are the optimal prices for the two groups of students?

• A)Charge $300 to EMBA and $240 to MBA
• B)Charge $240 to EMBA and $100 to MBA
• C)Charge $240 to EMBA and $240 to MBA
• D)None of the above

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Definitions:

Marginal Cost Curves

Graphs that show how the cost of producing one additional unit changes as the production volume increases.

Variable Costs

Costs that change in proportion to the level of output or activity, such as raw materials, labor, and utilities.

Output

The quantity of goods or services produced by a business, industry, or country.

Normal Profit

The payment made by a firm to obtain and retain entrepreneurial ability; the minimum income that entrepreneurial ability must receive to induce entrepreneurs to provide their entrepreneurial ability to a firm; the level of accounting profit at which a firm generates an economic profit of zero after paying for entrepreneurial ability.