11) The Maize Eagles are evaluating ticket prices for its basketball games. Studies show that Friday and Saturday night games average more than twice the number of fans compared to other days. The following information pertains to the stadium’s normal operations per season:
Average fans per game (all games)2,500fans
Average fans per Friday and Saturday night games3,500fans
Number of home games per season30games
Stadium capacity3,500seats
Variable operating costs per operating hour$2,000
Marketing costs per season for basketball$138,750
Customer-service costs per season for basketball$25,000
The stadium is open for 5 operating hours on each day a game is played. All employees work by the hour except for the administrators. A maximum of one game is played per day and each fan has only one ticket per game.
The stadium authority wants to charge more for games on Friday and Saturday. What is the minimum price that should be charged for peak attendance nights?
A) $4.40
B) $8.60
C) $6.19
D) $171.45
12) Hitz Video Rental is evaluating rental prices. Historical data show that Friday and Saturday have twice the rentals of other days of the week. The following information pertains to the store’s normal operations per week:
Average rentals per day on Friday and Saturday1,150
Average rentals per day on Sunday through Thursday500
Store hours per day12
Total units available for rent10,000
Variable operating costs per hour$ 40
Marketing costs per week$1,500
Customer service costs per week$ 250
The store manager wants to charge more for rentals on Friday and Saturday. What is the minimum price that should be charged during peak rental days?
A) $0.60
B) $0.83
C) $0.90
D) $1.07
13) Insensitivity of demand to price changes is called demand inelasticity.
14) Price discrimination is the practice of charging a higher price for the same product or service when demand approaches the physical limit of the capacity to produce that product or service.
15) Peak-load pricing is the practice of charging a lower price for the same product or service when the demand for it approaches the physical limit of the capacity to produce that product or service.
16) -Prices between countries vary beyond the cost of delivering the product to each country only because of changes in exchange rates.
can charge.
17) What factors may influence the level of markups?
18) A hotel in Orlando, Florida, experiences peak periods and slower times. How should prices be adjusted during peak periods? During slow times? Why?
19) Clark Manufacturing offers two product lines, IN2 and EL5. The demand of the IN2 product line is inelastic, while the demand of the EL5 product line is very elastic. If Clark initiates a price increase for both product lines, how will customer demand change? How will the price increase affect operating profits?
20) What advice would you give a company to avoid the appearance of predatory pricing?
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