You are the general manager of a firm that manufactures personal computers. Due to a soft economy, demand for PCs has dropped 50 percent from the previous year. The sales manager of your company has identified only one potential client, who has received several quotes for 10,000 new PCs. According to the sales manager, the client is willing to pay $800 each for 10,000 new PCs. Your production line is currently idle, so you can easily produce the 10,000 units. The accounting department has provided you with the following information about the unit (or average) cost of producing three potential quantities of PCs: 10,000 PCs 15,000 PCs 20,000 PCs
Materials (PC components) $600 $600 $600
Depreciation 300 225 150
Labor 150 150 150
Total unit cost $1,050 $975 $900

Required:
Based on this information, should you accept the offer to produce 10,000 PCs at $800 each? Explain.

German brothels recently began offering a monthly subscription service for multiple purchasers. if you thought that the brothels' encouragement of prostitution was immoral to begin with, would you consider this pricing plan to be even more immoral? suppose a particular patron at a german brothel has the following willingness-to-pay schedule for services at the brothel, per session. session willingness to pay 1st $84 2nd $72 3rd $60 4th $48 5th $36 6th $24 suppose this consumer would not demand any more sessions, even for free. also assume that the marginal cost to the brothel, per session, is constant at $12. at a price of $78.00 per session, the number of sessions demanded by this consumer would be . at this price and quantity, consumer surplus is $ and producer surplus is $ . suppose the brothel has devised a new pricing scheme for consumers who demand more than 1 session. this pricing scheme is a subscription service, whereby consumers can pay a flat fee of $259.20 and can have up to 6 sessions total. using this subscription pricing model, this consumer would demand sessions. under this scenario, consumer surplus is $ and producer surplus is $ . (hint: for consumer surplus, consider how much total value the consumer places on all sessions, versus the total price paid.)