NYU Intro to Marketing Final Exam
Practice Questions and Answers8
Suppose you run a gym where the marginal cost per customer is $5. Market research indicates
that there are 80 customers: 30 customers willing to pay up to $10, 25 willing to pay up to $15,
and 25 willing to pay up to $20. If you can choose two price points for price discrimination ($10,
$15, $20), which two should you choose to maximize profit? - ANSWERS-1
Marginal cost per customer = $5
Customers:
30 customers @ max $10
25 customers @ max $15
25 customers @ max $20
Calculate profits for possible pairs of prices:
Price points ($10 and $15):
Charge $10 to the 30 customers (Revenue: $300)
Charge $15 to the remaining 50 customers (Revenue: $750)
Total Revenue = $1050
Cost = $5 * 80 customers = $400
Profit = $1050 - $400 = $650
Price points ($10 and $20):
$10 to 30 customers (Revenue: $300)
$20 to 25 customers (Revenue: $500; lose customers who'd pay max $15)
Total Revenue = $800
Profit = $800 - $400 = $400
Price points ($15 and $20):
$15 to 55 customers (Revenue: $825; 30 @ $10 group leave as too expensive)
, $20 to 25 customers (Revenue: $500)
Total Revenue = $1325
Profit = $1325 - $400 = $925
Best prices to choose: $15 and $20
Answer: $15 and $20 (Profit: $925)
You sell gourmet chocolates. Your marginal cost is $2 per chocolate. Market research shows that
40 customers will pay up to $3, another 30 will pay up to $5, and 10 premium customers will
pay up to $8. If you can only choose one price, which price maximizes your profit? - ANSWERS-
Given:
Marginal cost per chocolate = $2
Customers:
40 willing to pay $3
30 willing to pay $5
10 willing to pay $8
Evaluate each price if choosing only one price:
At $3:
Revenue = $3 × 80 customers = $240
Cost = $2 × 80 = $160
Profit = $240 - $160 = $80
At $5:
Customers who will buy: only those who pay at least $5 → 30 + 10 = 40
Revenue = $5 × 40 = $200
Cost = $2 × 40 = $80
Profit = $200 - $80 = $120
At $8:
Customers = 10 only
Practice Questions and Answers8
Suppose you run a gym where the marginal cost per customer is $5. Market research indicates
that there are 80 customers: 30 customers willing to pay up to $10, 25 willing to pay up to $15,
and 25 willing to pay up to $20. If you can choose two price points for price discrimination ($10,
$15, $20), which two should you choose to maximize profit? - ANSWERS-1
Marginal cost per customer = $5
Customers:
30 customers @ max $10
25 customers @ max $15
25 customers @ max $20
Calculate profits for possible pairs of prices:
Price points ($10 and $15):
Charge $10 to the 30 customers (Revenue: $300)
Charge $15 to the remaining 50 customers (Revenue: $750)
Total Revenue = $1050
Cost = $5 * 80 customers = $400
Profit = $1050 - $400 = $650
Price points ($10 and $20):
$10 to 30 customers (Revenue: $300)
$20 to 25 customers (Revenue: $500; lose customers who'd pay max $15)
Total Revenue = $800
Profit = $800 - $400 = $400
Price points ($15 and $20):
$15 to 55 customers (Revenue: $825; 30 @ $10 group leave as too expensive)
, $20 to 25 customers (Revenue: $500)
Total Revenue = $1325
Profit = $1325 - $400 = $925
Best prices to choose: $15 and $20
Answer: $15 and $20 (Profit: $925)
You sell gourmet chocolates. Your marginal cost is $2 per chocolate. Market research shows that
40 customers will pay up to $3, another 30 will pay up to $5, and 10 premium customers will
pay up to $8. If you can only choose one price, which price maximizes your profit? - ANSWERS-
Given:
Marginal cost per chocolate = $2
Customers:
40 willing to pay $3
30 willing to pay $5
10 willing to pay $8
Evaluate each price if choosing only one price:
At $3:
Revenue = $3 × 80 customers = $240
Cost = $2 × 80 = $160
Profit = $240 - $160 = $80
At $5:
Customers who will buy: only those who pay at least $5 → 30 + 10 = 40
Revenue = $5 × 40 = $200
Cost = $2 × 40 = $80
Profit = $200 - $80 = $120
At $8:
Customers = 10 only
