The Hewl-Pact Company produces a popular printer than prints over 100 pages per minute. It recently announced that it was introducing a lower priced model of the printer that can print 30 pages per minute. While not revealed to the public, it turns out that it costs the company more to produce the lower priced product. The two models are identical except for a $20 internal part for the low-priced model that slows the printer from 100 to 30 pages per minute. Provide an economic explanation for why the company decided to produce a new lower priced, but more costly, model of the printer.

The Hewl-Pact Company produces a popular printer than prints over 100 pages per minute. It recently announced that it was introducing a lower priced model of the printer that can print 30 pages per minute. While not revealed to the public, it turns out that it costs the company more to produce the lower priced product. The two models are identical except for a $20 internal part for the low-priced model that slows the printer from 100 to 30 pages per minute. Provide an economic explanation for why the company decided to produce a new lower priced, but more costly, model of the printer.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter14: Pricing Techniques And Analysis

Section: Chapter Questions

Problem 7E

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