Ask Question, Ask an Expert


Ask Business Economics Expert

Pricing strategy for Argyle Inc and Baker Company.


You are a pricing manager at Argyle Inc. - a medium-sized firm that recently introduced a new product into the market.  Argyle's only competitor is Baker Company, which is significantly smaller than Argyle.  The management of Argyle has decided to pursue a short-term strategy of maximizing this quarter's revenues, and you are in charge of formulating a strategy that will permit the firm to do so.  After talking with an employee who was recently hired from the Baker Company, you are confident that (a) Baker is constrained to charge $10 or $20 for its product, (b) Baker's goal is to maximize this quarter's profits, and (c) Baker's relevant unit costs are identical to yours.  You have been authorized to price the product of two possible levels ($5 or $10) and know that your relevant costs are $2 per unit.  The marketing department has provided the following information about the expected number of units sold (in millions) this quarter at various prices to help you formulate your decision:

Argyle Price
Baker Price
Argyle Quantity (millions of units)
Baker Quantity (millions of units)

Argyle and Baker currently set prices at the same time.  However, Argyle can become the first-mover by spending $2 million on computer equipment that would permit it to set its price before Baker.  Discuss Argyle optimal cost and whether you should invest the $2 million.

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M922970

Have any Question? 

Related Questions in Business Economics

What would happen if there were decreases in both supply

What would happen if there were decreases in both supply and demand for some good such as a new tractor? 1. If the decrease in supply is greater than the decrease in demand, equilibrium price will fall. 2. If the decreas ...

Wellstone is a furniture manufacturer for the residential

Wellstone is a furniture manufacturer for the residential market that creates a variety of furniture pieces for the dining room, living room and bedroom. One of the company’s strategies has been to hold prices fixed at t ...

Which of the following statements describes a change in the

Which of the following statements describes a change in the quantity supplied and which describes a change in supply?? I Farms are selling less chicken because the price of turkey has increased. II Farms are selling less ...

At the beginning of 2013 norris company had a deferred tax

At the beginning of 2013, Norris Company had a deferred tax liability of $7,300, because of the use of MACRS depreciation for income tax purposes and units-of-production depreciation for financial reporting. The income t ...

In 2014 chesterfield industries had sales of 1200000 the

In 2014, Chesterfield Industries had sales of $1,200,000. The company had operating expenses (including depreciation) of $540,000, depreciation expense of $82,000 and interest expense of $54,000. Cost of goods sold was $ ...

Show transcribed image text the following equation is part

Show transcribed image text The following equation is part of a nutrition-based efficiency wage model: Total calories Cals were regressed on the number of meals MG given to guests at ceremonies, the number of meals ME gi ...

The market price of pizza in college town decreased

The market price of pizza in College Town decreased recently. Some students in an economics class suggest that the price fell because several new pizza parlors opened for business in the area. Other students attributed t ...

Assume the djia closed at 12487 last night the divisor is

Assume the DJIA closed at 12,487 last night. The divisor is 0.123017848. Assume that 29 of the stocks in the index were unchanged today. One stock increased in value from $54.80 a share yesterday to $56.90 a share today. ...

Which of the following does not represent a market failurea

Which of the following does NOT represent a market failure? a. Insufficient production of public goods, such as highways and national defense. b. Imperfect competition such as monopolies. c. Bankruptcies exist in the eco ...

1 nicole earned a salary of 50000 in 2015 she had losses of

1) Nicole earned a salary of $50,000 in 2015. She had losses of $12,000 in stock trades during the year. She will be able to deduct all of the losses from her income on her 2015 tax return. True or False 2) A corporation ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate