Blackstone,Inc The Selling Prices Include Installation Costs

question 8

Essay

Blackstone,Inc.,features over a dozen models of tires in many different sizes.Two of the models of tires are Deluxe and Regular.Tire size LX14 is available in both models.The following information was obtained:
$\begin{array}{lrr}&\text { Deluxe }&\text { Regular }\\\text { Selling prices: }\\\text { Single tire, installed } & \$ 54 & \$ 49 \\\text { Set of four tires, installed } & 199 & 185 \\\text { Cost per tire } & 30 & 23\end{array}$
The selling prices include installation costs.Each Deluxe tire costs $6 to mount and balance; each Regular tire costs $5 to mount and balance.
a. Compute the unit selling price for the tire only for both single tires and sets of four for each alternative.
b. Was cost the major consideration supporting these prices?
c. What other factors could have influenced these prices?

---

Definitions:

Pure Strategies

In game theory, strategies that involve making a specific choice or action with certainty, as opposed to mixed strategies where actions are chosen probabilistically.

Mixed Strategy

A strategic decision in game theory where a player chooses among all possible actions based on a set of probabilities for each action, rather than selecting a single action consistently.

Stackelberg Match

A strategic game in economics where one leader firm sets its output first, and then the follower firms set their outputs sequentially.

Cournot's Duopoly Game

A model of competition between two firms, where each firm chooses its output level assuming the output of the rival is fixed.