Mini-Case 11-2: the Price Is Right

question 52

Essay

Mini-Case 11-2: The Price is Right?
"It is obvious what people want; I can't imagine why someone never thought of it before. What good is it to be wealthy if I have to stay around the house all day waiting for service representatives or doing paperwork?" Penny Matthews decided she would take those responsibilities off the backs of the people of Tucson, Arizona. "My business will arrange for all the services you need around the home (lawn mowing, plumbing, carpets cleaning, televisions repairs, pools cleaning, everything). My clients will be free to enjoy their lives without worrying about their houses. We will also arrange for parties to be completely catered. In addition, if you wish, we will pay all your bills and reconcile your bank statement. A life without the irritations of domestic hassles; that's our service."
Penny was explaining the idea to her close friend and banker, Wallace Trevillian. "You have definitely thought about this for some time and put months of work into its planning," said Wallace. "What do you plan to charge for these services?"
"That's a good question, Wallace. I haven't thought about it."
-How would Penny Matthews go about determining how to price the services her business plans to offer?

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Definitions:

Odds

A statistical term representing the likelihood that an event will occur, expressed as the ratio of the event's probability to its non-occurrence.

Mammogram

An X-ray picture of the breast used to detect and diagnose breast diseases, such as cancer.

Recent Mammogram

An X-ray photograph of the breast taken recently, usually within the past year, to detect cancer or other abnormalities.

Logistic Regression

A statistical analysis method used to predict the outcome of a categorical dependent variable based on one or more independent variables, providing probabilities and odds ratios.