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defrost feature. Female shoppers generally value
microwaves more than men and attribute value to the auto-
defroster feature. There is little additional cost to
incorporating auto defrost feature. Since men and women
cannot be charged different prices for the same product the
manufacturer is considering introducing two different
models. The manufacturer has determined that men value a
simple microwave at $70 and one with auto defrost at $80
while women value a simple microwave at $80 and one with
auto defrost at $150. If there is an equal number of men and
women, what pricing strategy will yield the greatest
revenue? What if women compromise the bulk of microwave
shoppers?
Salvatore’s Chapter 13:
a) Discussion Questions: 8 and 10.
b) Problems: 12, 13, and 15.
Discussion 8: What is the basic difference between using a
subsidy to induce producers to install antipollution
equipment and a tax on producers who pollute?
Discussion 10: Given the difficulties that the regulation of
public utilities faces, would it not be better to nationalize
public utilities, as some European countries have done?
Explain your answer