Question 14 Cooking Wok Value to home users Value to professional Chefs No-name
ID: 1217324 • Letter: Q
Question
Question 14
Cooking Wok
Value to home users
Value to professional Chefs
No-name brand
$50
$60
High-end professional series
$70
$100
Given that the firm offers both the products, what is the maximum price it can charge for the high-end wok to have the chefs only buy the high-end wok?
a.
$70
b.
$90
c.
$80
d.
$100
5 points
Question 15
Cooking Wok
Value to home users
Value to professional Chefs
No-name brand
$50
$60
High-end professional series
$70
$100
Given that the firm offers both the products would the chefs ever pay the full $100 for the high-end wok
a.
Yes, because they value it at $100
b.
No, because they value it at $70
c.
No, because they can get a positive consumer surplus buying the no-name brand
d.
All of the above
5 points
14. Not D
15. Not A
Cooking Wok
Value to home users
Value to professional Chefs
No-name brand
$50
$60
High-end professional series
$70
$100
Explanation / Answer
14. for the professional high end series, the producer will charge $70 as for that price both home maker and chef would buy the product and chef would buy high end product only as given that price utility of non branded wok is less that the price charged.
15. yes, the chef would pay $100 for the high end product as the utility derived is $100 and thats the maximum amount he would pay for that product.
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