Question

A satellite radio company is the sole supplier of a brand-new service providing commercial-free music that competes with existing free, broadcast-radio music delivered via antennas. The service is automatically activated for a 6-month introductory free-trial period, and is only available to people who purchase a new car with a specially equipped receiver. After the trial period, customers must call the company to activate and retain the service. Match each customer below to the radio company’s best profit-maximizing price strategy.
a. Ricardo explains that he is indifferent to the new service, and has not yet sampled many of the stations.
b. Joe, who explains that he needs music to sing along with while he commutes two hours each day for work.
c. Natasha, who says that she likes the service, but who commutes less than a half hour each day for work.

1. high price
2. medium price
3. low price

Answer 1

The answer to your question is 1. high price