1. In the razorsandblades.xls file example suppose the cost to produce a blade is 0.20. If you charge 0.35 for

1. In the razorsandblades.xls file example, suppose the cost to produce a blade is $0.20. If you charge $0.35 for a blade, a customer buys an average of 50 blades from you. Assume the price elasticity of demand for blades is 3. What price should you charge for a razor and for a blade?
2. You manage a movie theater that can handle up to 8,000 patrons per week. The current demand, price, and elasticity for ticket sales, popcorn, soda, and candy are given in Figure 4-16. The theater keeps 45 percent of ticket revenues. Unit cost per ticket, popcorn sales, candy sales, and soda sales are also given. Assuming linear demand curves, how can the theater maximize profits? Demand for foods is the fraction of patrons who purchase the given food.

 

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