Using the same information as above,suppose you can set one price for MBA students and one price for EMBA students.However you know that MBA students are willing to resell the Primer to EMBA students for their purchase price plus $60.MBA students pay $x and they can resell the primer for $(x + 60).Assuming there are no other cost involved in this transaction and it cannot be prevented.What are the optimal prices for the two groups of students?

Question

Quizplus · Accepted Answer

Since MBA students can resell the primer for $(x+60), their willingness to pay would be $(x+60) and not just x. This means that in order to maximize revenue, the price charged to MBA students should be close to $(x+60) but not equal to it, as this would lead to no profit for the seller.

Let's assume that MBA students are willing to pay $200 for the primer. Then, they would resell it for $(200+60)=$260. In this case, if the price charged to them is $200, the seller would not make any profit as the resale price is equal to the purchase price. However, if the price charged is $240, the seller would make a profit of $40 per unit sold.

On the other hand, EMBA students are not expected to resell the primer, so their willingness to pay is not affected by this factor. Therefore, the optimal price for them is the maximum price they are willing to pay, which is $300.

Therefore, the optimal prices for the two groups of students are $300 for EMBA students and $240 for MBA students. This would maximize revenue for the seller while taking into account the resale factor for MBA students.

Using the Same Information as Above,suppose You Can Set One