Question 4

What is the maximum profit you can achieve with the discounting strategy in Question 3? $_____

Part D-Free Goods Pricing

Suppose that, knowing this market has network effects, you try "seeding the market" by giving

away the 3D fax machine to certain users in a targeted manner. In this case, you have a fixed

price for the machine, but you also consider giving away free machines to specific consumers,

taking a loss on the $2 manufacturing cost.

Question 5

Which of these free goods pricing strategies will maximize profit?

A. Fixed price of $11 and give 1 free item to Buyer 12

B. Fixed price of $44 and give 1 free item each to Buyers 1 to 3

C. Fixed price of $66 and give 1 free item each to Buyers 1 to 5

D. Fixed price of $84 and give 1 free item each to Buyers 1 to 7