The results of a study by Cafe Du Monde shows that customers' reservation price (i.e.,...
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The results of a study by Cafe Du Monde shows that customers' reservation price (i.e., w.t.p.) for a beignet (French doughnut) is uniformly distributed between $0.5 to $1.5. a) Draw the w.t.p function. (5pts) b) If Cafe Du Monde sell a beignet at $1.1, find the fraction of customers that will purchase one at this price (10pts) c) If Cafe Du Monde their French doughnut at $0.8 per beignet, find the fraction of customers that will not purchase a doughnut at this price (10pts) d) Cafe Du Monde maximum production capacity is 20000 beignets per day (Hint: that can be considered as D, the market size). Find the formula for the price-response curve for beignets. (15pts)
The results of a study by Cafe Du Monde shows that customers' reservation price (i.e., w.t.p.) for a beignet (French doughnut) is uniformly distributed between $0.5 to $1.5.
a) Draw the w.t.p function. (5pts)
b) If Cafe Du Monde sell a beignet at $1.1, find the fraction of customers that will purchase one at this price (10pts)
c) If Cafe Du Monde their French doughnut at $0.8 per beignet, find the fraction of customers that will not purchase a doughnut at this price (10pts)
d) Cafe Du Monde maximum production capacity is 20000 beignets per day (Hint: that can be considered as D, the market size). Find the formula for the price-response curve for beignets. (15pts)
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