CHAPTER 36: Information Technology
MULTIPLE CHOICE
1. If the demand function for the DoorKnobs operating system is related to perceived market share s and
actual market share x by the equation p = 512s(1 − x), then in the long run, the highest price at which
DoorKnobs could sustain a market share of 3/4 is
a.
$256.
b.
$128.
c.
$113.78.
d.
$96.
e.
$81.92.
2. If the demand function for the DoorKnobs operating system is related to perceived market share s and
actual market share x by the equation p = 512s(1 − x), then in the long run, the highest price at which
DoorKnobs could sustain a market share of 4/5 is
a.
$96.
b.
$256.
c.
$113.78.
d.
$128.
e.
$81.92.
3. If the demand function for the DoorKnobs operating system is related to perceived market share s and
actual market share x by the equation p = 512s(1 − x), then in the long run, the highest price at which
DoorKnobs could sustain a market share of 3/4 is
a.
$113.78.
b.
$128.
c.
$256.
d.
$96.
e.
$81.92.
4. If the demand function for the DoorKnobs operating system is related to perceived market share s and
actual market share x by the equation p = 512s(1 − x), then in the long run, the highest price at which
DoorKnobs could sustain a market share of 3/4 is
a.
$96.
b.
$128.
c.
$256.
d.
$113.78.
e.
$81.92.
5. If the demand function for the DoorKnobs operating system is related to perceived market share s and
actual market share x by the equation p = 512s(1 − x), then in the long run, the highest price at which
DoorKnobs could sustain a market share of 3/4 is
a.
$256.
b.
$113.78.
c.
$96.
d.
$128.
e.
$81.92.
6. Eleven consumers are trying to decide whether to connect to a new communications network.
Consumer 1 is of type 1, consumer 2 is of type 2, consumer 3 is of type 3, and so on. Where k is the
number of consumers connected to the network (including oneself), a consumer of type n has a
willingness to pay to belong to this network equal to k times n. What is the highest price at which 4
consumers could all connect to the network and either make a profit or at least break even?
a.
$24
b.
$64
c.
$40
d.
$28
e.
$32
7. Eleven consumers are trying to decide whether to connect to a new communications network.
Consumer 1 is of type 1, consumer 2 is of type 2, consumer 3 is of type 3, and so on. Where k is the
number of consumers connected to the network (including oneself), a consumer of type n has a
willingness to pay to belong to this network equal to k times n. What is the highest price at which 5
consumers could all connect to the network and either make a profit or at least break even?
a.
$49
b.
$30
c.
$42
d.
$28
e.
$35
8. Eleven consumers are trying to decide whether to connect to a new communications network.
Consumer 1 is of type 1, consumer 2 is of type 2, consumer 3 is of type 3, and so on. Where k is the
number of consumers connected to the network (including oneself), a consumer of type n has a
willingness to pay to belong to this network equal to k times n. What is the highest price at which 4
consumers could all connect to the network and either make a profit or at least break even?
a.
$24
b.
$40
c.
$64
d.
$28
e.
$32
9. Eleven consumers are trying to decide whether to connect to a new communications network.
Consumer 1 is of type 1, consumer 2 is of type 2, consumer 3 is of type 3, and so on. Where k is the
number of consumers connected to the network (including oneself), a consumer of type n has a
willingness to pay to belong to this network equal to k times n. What is the highest price at which 9
consumers could all connect to the network and either make a profit or at least break even?
a.
$30
b.
$9
c.
$18
d.
$24
e.
$27
10. Eleven consumers are trying to decide whether to connect to a new communications network.
Consumer 1 is of type 1, consumer 2 is of type 2, consumer 3 is of type 3, and so on. Where k is the
number of consumers connected to the network (including oneself), a consumer of type n has a
willingness to pay to belong to this network equal to k times n. What is the highest price at which 11
consumers could all connect to the network and either make a profit or at least break even?
a.
$12
b.
$10
c.
$1
d.
$0
e.
$11
11. Professor Kremepuff’s new, user-friendly textbook has just been published. This book will be used in
classes for two years, after which it will be replaced by a new edition. The publisher charges a price of
p1 in the first year and p2 in the second year. After the first year, bookstores buy back used copies for
p2/2 and resell them to students in the second year for p2. (Students are indifferent between new and
used copies.) The cost to a student of owning the book during the first year is therefore p1 − p2/2. In the
first year of publication, the number of students willing to pay $v to own a copy of the book for a year
is 80,000 − 1,000v. The number of students taking the course in the first year who are willing to pay
$w to keep the book for reference rather than sell it at the end of the year is 80,000 − 5,000w. The
number of persons who are taking the course in the second year and are willing to pay at least $p for a
copy of the book is 75,000 − 1,000p. If the publisher sets a price of p1 in the first year and p2 = p1 in
the second year, then the total number of copies of the book that the publisher sells over the two years
will be
a.
160,000 − 1,000p1 − 1,000p2.
b.
160,000 − 1,000(p1 − p2/2).
c.
160,000 − 3,000p2.
d.
155,000 − 1,000(p1 + p2/2).
e.
155,000 − 1,500p2.
12. Professor Kremepuff’s new, user-friendly textbook has just been published. This book will be used in
classes for two years, after which it will be replaced by a new edition. The publisher charges a price of
p1 in the first year and p2 in the second year. After the first year, bookstores buy back used copies for
p2/2 and resell them to students in the second year for p2. (Students are indifferent between new and
used copies.) The cost to a student of owning the book during the first year is therefore p1 − p2/2. In the
first year of publication, the number of students willing to pay $v to own a copy of the book for a year
is 50,000 − 1,500v. The number of students taking the course in the first year who are willing to pay
$w to keep the book for reference rather than sell it at the end of the year is 50,000 − 7,500w. The
number of persons who are taking the course in the second year and are willing to pay at least $p for a
copy of the book is 45,000 − 1,500p. If the publisher sets a price of p1 in the first year and p2 = p1 in
the second year, then the total number of copies of the book that the publisher sells over the two years
will be
a.
100,000 − 1,500p1 − 1,500p2.
b.
100,000 − 1,500(p1 − p2/2).
c.
95,000 − 1,500(p1 + p2/2).
d.
100,000 − 4,500p2.
e.
95,000 − 2,250p2.
13. Professor Kremepuff’s new, user-friendly textbook has just been published. This book will be used in
classes for two years, after which it will be replaced by a new edition. The publisher charges a price of
p1 in the first year and p2 in the second year. After the first year, bookstores buy back used copies for
p2/2 and resell them to students in the second year for p2. (Students are indifferent between new and
used copies.) The cost to a student of owning the book during the first year is therefore p1 − p2/2. In the
first year of publication, the number of students willing to pay $v to own a copy of the book for a year
is 50,000 − 500v. The number of students taking the course in the first year who are willing to pay $w
to keep the book for reference rather than sell it at the end of the year is 50,000 − 2,500w. The number
of persons who are taking the course in the second year and are willing to pay at least $p for a copy of
the book is 30,000 − 500p. If the publisher sets a price of p1 in the first year and p2 = p1 in the second
year, then the total number of copies of the book that the publisher sells over the two years will be
a.
100,000 − 500(p1 − p2/2).
b.
80,000 − 500(p1 + p2/2).
c.
100,000 − 500p1 − 500p2.
d.
100,000 − 1,500p2.
e.
80,000 − 750p2.
14. Professor Kremepuff’s new, user-friendly textbook has just been published. This book will be used in
classes for two years, after which it will be replaced by a new edition. The publisher charges a price of
p1 in the first year and p2 in the second year. After the first year, bookstores buy back used copies for
p2/2 and resell them to students in the second year for p2. (Students are indifferent between new and
used copies.) The cost to a student of owning the book during the first year is therefore p1 − p2/2. In the
first year of publication, the number of students willing to pay $v to own a copy of the book for a year
is 60,000 − 1,000v. The number of students taking the course in the first year who are willing to pay
$w to keep the book for reference rather than sell it at the end of the year is 60,000 − 5,000w. The
number of persons who are taking the course in the second year and are willing to pay at least $p for a
copy of the book is 45,000 − 1,000p. If the publisher sets a price of p1 in the first year and p2 = p1 in
the second year, then the total number of copies of the book that the publisher sells over the two years
will be
a.
120,000 − 3,000p2.
b.
120,000 − 1,000(p1 − p2/2).
c.
120,000 − 1,000p1 − 1,000p2.
d.
105,000 − 1,000(p1 + p2/2).
e.
105,000 − 1,500p2.
15. Professor Kremepuff’s new, user-friendly textbook has just been published. This book will be used in
classes for two years, after which it will be replaced by a new edition. The publisher charges a price of
p1 in the first year and p2 in the second year. After the first year, bookstores buy back used copies for
p2/2 and resell them to students in the second year for p2. (Students are indifferent between new and
used copies.) The cost to a student of owning the book during the first year is therefore p1 − p2/2. In the
first year of publication, the number of students willing to pay $v to own a copy of the book for a year
is 60,000 − 500v. The number of students taking the course in the first year who are willing to pay $w
to keep the book for reference rather than sell it at the end of the year is 60,000 − 2,500w. The number
of persons who are taking the course in the second year and are willing to pay at least $p for a copy of
the book is 40,000 − 500p. If the publisher sets a price of p1 in the first year and p2 = p1 in the second
year, then the total number of copies of the book that the publisher sells over the two years will be
a.
120,000 − 1,500p2.
b.
120,000 − 500p1 − 500p2.
c.
120,000 − 500(p1 − p2 /2).
d.
100,000 − 500(p1 + p2 /2).
e.
100,000 − 750p2.