What price should microsoft set for the package

Assignment Help Econometrics
Reference no: EM131335750

Microsoft sells two types of office software, a word processor it calls Word, and a spreadsheet it calls Excel. Both can be produced at zero marginal cost. There are two types of consumers for these products, who exist in roughly equal proportions in the population: authors, who are willing to pay $120 for Word and $40 for Excel, and economists, who are willing to pay $50 for Word and $150 for Excel.

a. Ideally, Microsoft would like to charge authors more for Word and economists more for Excel. Why would it be difficult for Microsoft to do this?

b. Suppose that Microsoft execs decide to sell Word and Excel separately. What price should Microsoft set for Word? (Hint: Is it better to sell only to authors, or to try to sell to both authors and economists?) What price should Microsoft set for Excel? What will Microsoft's profit be from a representative group of one author and one economist?

c. Suppose that Microsoft decides to bundle together Word and Excel in a package called Office, and not offer them individually. What price should Microsoft set for the package? Why? How much profit will Microsoft generate from a representative group of one author and one economist?

d. Does bundling allow Microsoft to generate higher profit than selling Word and Excel separately?

Reference no: EM131335750

Questions Cloud

Experienced and could it have been prevented : Did you know that the skin is our largest organ in the body? Many different skin reactions can occur that can be acute or chronic. Tell us about a reaction you have experienced and could it have been prevented?
How that population might be disenfranchised : Post a brief description of the population you selected. Then, explain how that population might be disenfranchised by the Social Security program based on research, statistics, or policy analysis
Incentive to control the care and cost of health benefits : Consumer Driven Health Plans provide individuals with an incentive to control the care and cost of health benefits. Research a CDHP such as an HRA, HSA, or FSA and discuss ways that you might be able to control cost if you were enrolled in the pla..
Benefits of distance learning programs : List three benefits of distance learning programs. Explain how they are beneficial to the organizations allowing their employees to partake in them.
What price should microsoft set for the package : Ideally, Microsoft would like to charge authors more for Word and economists more for Excel. Why would it be difficult for Microsoft to do this?
What are considered suicide risk factors : What are considered suicide risk factors? How might these factors be exacerbated in a correctional facility? What constructive measures can be taken by correctional facilities administrators to curb suicide
Servant leadership and world-changing outcomes : How does the visionary component of change relate to servant leadership and world-changing outcomes? What examples of servant leadership and world-changing outcomes can you provide from your own professional background?
How does the author make his case : How does the author make his case? What are the essential elements of his position? What sorts of things does he assume? What's his overall mindset about the issue? How and why are these essential aspects of his position related to your discussion..
Review the transcript effective counselor characteristics : Review the "Transcript: Effective Counselor Characteristics and Behaviors" document located in the Learning Resources. Think about which of the clinical mental health counselor's characteristics and behaviors in the case study were effective and w..

Reviews

Write a Review

Econometrics Questions & Answers

  Design a simple econometric research project

Design a simple econometric research project

  Multiplicative decomposition method

Multiplicative decomposition method

  Market for cigarettes

The Australian government administers two programs that affect the market for cigarettes.

  Solve the forecast model

Solve the forecast model

  What are the marginal abatement cost functions

What are the marginal abatement cost functions for each of the two areas? Calculate the loss in the two areas due to over-control (for the rural area) and under-control (for the urban area).

  Write the t statistic for testing the null hypothesis

Explain why this model violates the assumption of no perfect collinearity.  Write the t statistic for testing the null hypothesis

  What is economics system

What is economics system? What are the types of economics system? Briefly explain each type of economics system by giving examples of nations that are close to each type

  Multiple choice questions related to market concentration

Determine when a competitively produced product generates negative externalities in production, the industry will,

  Calculating number of units produced by firm

Assume a company has the following production function: Q = 100 K.5 L1 . Currently, the company hires 1,000 workers and employs 100 units of capital.

  Question about mobile commerce

M-commerce also known as mobile commerce is being lumped in with several strategic internet plans. Explain some of the industries that are likely to use mobile commerce and how it is working for them.

  Calculating the average days past due and average flow time

Auto Data manufactures custom engineering testing machine. The following 5-orders are currently in the design department:

  Mechanism of an english auction and second price auction

Briefly discuss the difference between mechanism of an oral or English auction and a Vickrey or second price auction.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd