Q1 What is the average willingness to pay for a single song? (Format as $0.00) _____
Q2 What is the optimal price of a song to generate the most profit? (Format as $0.00) _____
Q3 How many songs sell at this price? (Format as number) _____
Q4 At this price, what are the maximum profits of the firm? (Format as $0.00) _____
Q5At this price, what proportion of songs with positive value are not sold? (Format as 0.00%) _____
Q6For all songs that are sold, how much consumer surplus do consumers keep? (Format as $0.00) _____
Q7How much social value is not created? This is also called ‘value of unsold items’ or the ‘missing surpluses. (Uncaptured consumer surplus or Total WTP of those consumers who are ready to pay a non-negative price) (Format as $0.00) _____
Analysis
ITEM SALES ITEM PRICE PROFIT BUN SALES BUN PRICE BUN PROFIT
8032 0.10 803.20 <------------ See below for explanation of equation in Column A 100 25.85 2585.00 <------------ Bundled price is the sorted (and transposed) Total WTP for each Consumer from the WTP sheet 5845 0.25 1461.25 99 27.8 2752.20 3738 0.50 1869.00 98 29.85 2925.30 1555 0.90 1399.50 97 30.5 2958.50 762 1.50 1143.00 96 30.85 2961.60 95 31 2945.00 94 31.2 2932.80 93 31.45 2924.85 92 31.5 2898.00 91 31.75 2889.25 91 31.75 2889.25 89 31.9 2839.10 88 32.05 2820.40 87 32.4 2818.80 86 32.45 2790.70 85 32.65 2775.25 84 32.7 2746.80 83 32.85 2726.55 82 33.05 2710.10 81 33.2 2689.20 80 33.35 2668.00 79 33.4 2638.60 79 33.4 2638.60 77 33.45 2575.65 Best Price: $ 0.50 <- Choose cell with price that maximizes profit (this will adjust item Consumer Surplus ) 77 33.45 2575.65 Best Price: $ 30.85 <- Choose cell with price that maximizes profit (this will adjust Bundle Consumer Surplus) Max Profit: $ 1,869.00 <- Choose cell with max profit 75 33.6 2520.00 Max Profit: $ 2,961.60 <- Choose cell with max profit Total Avail CS $ 3,693.65 Total consumer value of all songs 74 33.65 2490.10 Total Available CS $ 3,693.65 Total consumer value of all songs Avg Item WTP $ 0.46 How much consumers are willing to pay for items on average 73 33.7 2460.10 Avg Bundle WTP $ 36.94 How much consumers are willing to pay for bundles on average? Mode Item WTP $ 0.10 Mode of the distribution for single item WTP 73 33.7 2460.10 Total CS $ 618.05 Total (WTP - Price Paid) across all sold bundles Total CS $ 1,079.20 Total (WTP - Price Paid) across all sold songs 71 34.05 2417.55 % Unsold 3.85% Total WTP such that 0 < WTP < Price % Unsold 53.46% Total WTP such that 0 < WTP < Price 70 34.15 2390.50 Missing Surplus $ 114.00 Unsold bundles = Total Avail CS - Profit - Kept CS Missing Surplus $ 745.45 Total Value of Unsold items = Total Avail CS - Profit - CS Kept 69 34.2 2359.80 68 34.35 2335.80 67 34.6 2318.20 67 34.6 2318.20 65 34.7 2255.50 65 34.7 2255.50 63 35 2205.00 COMMENT: "=COUNTIF(WTP!$B$2:$CW$101,CONCATENATE(">=”,TEXT(B2,”0.00″)))” 62 35.15 2179.30
COMMENT: “Count each WTP item for which user value is >= price. The CONCATENATE and TEXT create a test string based on price in B2 carried to 2 digits.” 61 35.2 2147.20
60 35.3 2118.00 COMMENT: “=SUM(WTP!B106:CW106)/(COUNTIF(WTP!B2:CW101,”>0″))”
COMMENT: “=(COUNTIF(WTP!B2:CW101,”<"&B26))/(
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