2. multiply the bundled price by the number of people willing to pay at that price. (In the concert example, all 4 segments will pay $100, so the revenue is $100 X 2000. Only 2 segments are willing to pay $120, so the revenue is $120 X 1000. Consequently $100 is the better price with revenue of $200,000.)
2. Set combination price at maximum ($120 in the example because segments 1 & 2 are willing to pay up to $120 for the bundle).
3. multiply the price per concert ($90) times the volume (500 in a single segment) to get single ticket revenue of $45,000 per concert.
4. There are two concerts where the segments are willing to pay $90 per ticket, so multiply $45,000 x 2. Revenue for two concerts is $90,000
5. There are two concerts for which the max WTP is $120 for the bundle, so multiply the bundle price by the number of people willing to pay for the bundle ($120x1000). Bundle revenue equals $120,000.
6. Add bundled revenue to single ticket revenue: $90,000 + $120,000. Total revenue for mixed bundle is $210,000.
Suppose the French suddenly develop a strong taste for California wines. Answer the following question in words and with a diagram. a. What happens to the demand for dollars in the market for foreign-currency exchange? b. What happens to the value of dollars in the market for foreign-currency exchange? c. What happens to the quantity of net exports?
Suppose that many stocks are traded in the market and that it is possible to borrow at the risk-free rate, . The characteristics of two of the stocks are as follows:
|Stock||Expected Return||Standard Deviation|
Could the equilibrium be greater than ? (Hint: Can a particular stock portfolio be substituted for the risk-free asset?)
Data related to the acquisition of timber rights and intangible assets during the current year ended December 31 are as follows:
a. On December 31, the company determined that $3,400,000 of goodwill was impaired. b. Governmental and legal costs of$4,800,000 were incurred on September 30 in obtaining a patent with an estimated economic life of eight years. Amortization is to be for one-fourth year. c. Timber rights on a tract of land were purchased for $2,975,000 on February 4. The stand of timber is estimated at 12,500,000 board feet. During the current year, 4,150,000 board feet of timber were cut and sold.
- Determine the amount of the amortization, depletion, or impairment for the current year for each of the foregoing items.
- Journalize the adjusting entries to record the amortization, depletion, or impairment for each item.