Question

You are the manager of a local sporting goods store and recently purchased ashipment of 60 sets of skis and ski bindings at a total cost of $30,000 (yourwholesale supplier would not let you purchase the skis and bindings separately,nor would it let you purchase fewer than 60 sets). The community in whichyour store is located consists of many different types of skiers, ranging fromadvanced to beginners. From experience, you know that different skiers valueskis and bindings differently. However, you cannot profitably price discrimi-nate because you cannot prevent resale. There are about 20 advanced skierswho value skis at $350 and ski bindings at $250; 20 intermediate skiers whovalue skis at $250 and ski bindings at $375; and 20 beginning skiers who valueskis at $175 and ski bindings at $325. Determine your optimal pricing strateg

Answer 1

Optimal price is $575 which includes skis and ski binding.

Step-by-step explanation:

Skiers who value skis at

Advance 20 * [$350 + $250] = $12,000

Intermediate 20 * [$250 + $375] = $12,500

beginners 20 * [$175 + $325] = $10,000

Total Revenue $34,500

Optimal price $34,500 / 60 = $575.