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    Elasticity

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    Calculate the profit-maximizing quantities and prices for a firm that can practice third-degree price discrimination. Use the result to prove the general relationship between pricing policy and price elasticity of demand.

    A. Explain what is meant by "third-degree" price discrimination. What conditions would have to hold for a firm to be able to engage in third-degree price discrimination? If these conditions hold, what general rule would a firm follow to maximize profits? How would its pricing policy be related to the elasticity of demand?

    Examining Price Elasticity of Demand

    Please see the attached(MicroAS7). The document file (price elasticity of demand formula sheet) is to answer many questions about how to calculate the Ed and how to interpret the answers.

    Price Elasticity of Demand Formula

    The Mayor of Elasticity Mayor Michael Bloomberg (R-NYC) in the Spring 2007, 2008, 2009 and again in 2011, was rebuffed in his attempt to institute a "congestion" pricing plan for lower Manhattan. Essentially the Mayor wanted to impose an $8 surcharge on any car entering lower Manhattan Monday-Friday, from about 6 am - 11 am.

    Managerial Economics

    Wilpen Company, a price-setting firm, produces nearly 80 percent of all tennis balls purchased in the United States. Wilpen estimates the U.S demand for its tennis balls by using the following linear specifications: Q= a + bP + cM = dP R Where Q is the number of cans of tennis balls sold quarterly, P is the wholesale price

    Effects of an incentive program on Ford's bottom line.

    Ford announced that the company would extend its most dramatic consumer incentive program in the company's long history: the Ford Drive America Program. The program provides consumers with either cash back or zero financing for new Ford vehicles. As the manager of a Ford franchise, how would you expect this program to impact you

    Design a demand curve.

    A restaurant that goes by the name Soft Rock Cafe is contemplating a T-shirt advertising promotion. Monthly sales data from T-shirt shops marketing the "Barry Manilow Eats at Soft Rock" design indicate that the demand curve for the T-shirts can be described as: Q = 4,000 - 500P where Q is T-shirt sales and P is price.

    Price elasticity of demand

    Suppose you are a painter, and the price of a gallon of paint increases from $3.00 a gallon to $3.50 a gallon. Your usage of paint drops from 35 gallons a month to 20 gallons a month. Perform the following: Compute the price elasticity of demand for paint and show your calculations. Decide whether the demand for paint is ela

    Compute the price elasticity of demand.

    Details: Suppose you are a painter, and the price of a gallon of paint increases from $3.00 a gallon to $3.50 a gallon. Your usage of paint drops from 35 gallons a month to 20 gallons a month. Perform the following: 1.Compute the price elasticity of demand for paint and show your calculations. 2.Decide whether the demand for p

    Compute the price elasticity of demand.

    Suppose you are a painter, and the price of a gallon of paint increases from $3.00 a gallon to $3.50 a gallon. Your usage of paint drops from 35 gallons a month to 20 gallons a month. Perform the following: 1.Compute the price elasticity of demand for paint and show your calculations. 2.Decide whether the demand for paint is e

    Cross Elasticity of Demand

    Both SmithCo and Jones Inc. sell widgets. SmithCo's sales last month equalled 1000 and it charged a price of $2. This month Jones Inc. reduced the price it sells its brand of widgets from $2.10 to $2, and SmithCo saw a reduction in the quantity of widgets is sold, down to 900 units. What is the cross elasticity of demand between

    Elasticity of Ice Cream

    An ice cream store owner reads in the local paper that the elasticity of market demand for ice cream is -.38. He concluded that if he raised the price of ice cream, his total revenue would increase. So, he increased his prices by 18%, yet revenues fell substantially. Why did this outcome occur?

    Analyzing given production function - Cobb Douglas Equation

    Assume Firm Y's production function is given by the following Cobb Douglas equation Q = 0.5 x L^0.6 x K^0.5 where L denotes labor and K denotes capital. The production function exhibits (increasing/decreasing/constant) returns to scale. 1. If labor hours increase by 10%, what is the percentage change in output (provi

    Managerial Economics

    The demand function for kingston's product is given by logQ = 2.01 -0.148LogP + 0.25Log Z Q = the quantity demanded (in tons) of its product, P = the price ( in dollars per ton), and Z = the price(in dollars of a rival product a. Calculate the price elastic of demand b. Calculate the cross elasticity of demand betwe

    Calculating output elasticity in the given case

    A firm has carefully measured its production function, and thinks that it can be approximated by: Q = K^0.55*L^0.45, where Q = units of output, K = units of capital, and L = units of labor. a. What is output elasticity in this case? b. What sort of returns to scale does the firm face? Explain.

    Price Elasticity HW Question

    The demand function for gadgets is given by the following formula Q = 1,000 -10Y - 2 P + 4A where Q is quantity, Y is income, P is price, and A is advertising. Currently, Y = 20, P = 30, and A is 15 What is the point price elasticity of demand? -0.0375 -1.33 -.075 -13.33 -0.75

    Calculate the price elasticity of demand.

    Demand for DVD rentals at a video store is described by the equation: Q = 4,000 - 500P, where Q denotes the number of DVDs rented per week and P is the rental price in dollars. a) Determine the point price elasticity of demand at P = $3.00. b) What is the new point price elasticity if price is raised to P = $4.50? c) Co

    Production Function

    Assume Firm Y's production function is given by the following Cobb Douglas equation Q = 0.5 x L^0.6 x K^0.5 where L denotes labor and K denotes capital. The production function exhibits (increasing/decreasing/constant) returns to scale. If labor hours increase by 10%, what is the percentage change in output (provide a

    Elasticity of Supply is exemplified.

    Food stamps programs serve only to drive food prices higher, not increase the quantity of food available to the poor.� What would the elasticity of supply have to be for this statement to be true? What would the elasticity of supply have to be for a food stamp program to increase the availability of food to the poor with no

    Production Economics of Widgets

    A widget manufacturer sold 10,000 widgets for $2.50 each. Total fixed costs are $5,000 and variable costs per unit are $.80. (a) Given this information, what is the total profit for this production run? (b) Marketing research indicated that the price elasticity demand coefficient for the widgets is 2.5. (c) The facto

    Suppose a firm has a constant marginal cost of 10$. The current price of the product is 25$, and at that price it is estimates that the price elasticity of demand is -3.0 a) Is the firm charging the optimal price for the product? Demonstrate how you know. b) Should the price be changed? if so, How?

    Suppose a firm has a constant marginal cost of 10$. The current price of the product is 25$, and at that price it is estimates that the price elasticity of demand is -3.0 a) Is the firm charging the optimal price for the product? Demonstrate how you know. b) Should the price be changed? if so, How?

    Calculate the own price, income and cross price elasticities of demand.

    A book publisher has the following demand function for the firm's novels (Qx): Qx = 12,000-5,000Px + 5I + 500Pc where Px is the price charged for the firm's novels, I is income per Capita, and Pc is the price of books from competing publishers. Assume that the initial values of Px, I, and Pc are $5, $10,000, and $6, respecti

    Price elasticity of demand

    1. The Interior Department recently announced that it will increase the entrance fees at Yellowstone National Park in order to increase park revenues. The Interior Department must believe that: A. Park goers are very responsive to price changes. B. The demand for park services is elastic. C. The percentage increase in fees

    Calculating price elasticity of demand

    ABC company has conducted a U.S market survey for their most popular brand of contact lenses, and obtained the following information. What is the elasticity of demand? Year Population Price Average Income Eyeglass Population Number of Quantity Demanded (millions) (adjusted (adj.

    Log Functions and Elasticity of Variables

    The demand for haddock has been estimated as: log Q = a + b log P + c log I = d log Pm where Q = quantity of haddock sold in New England P = price per pound of haddock I = a measure of personal income in the New England region Pm = an index of the price of meat and poultry I

    Price discrimination: Example problem

    Many restaurants offer "early-bird specials " to dinner customers. These specials consist of a significant price reduction on selected menu items purchased before some pre-determined time, e.g., 6 p.m. Is such a practice a form of price discrimination? If so, what type?

    Demand and Elasticity concepts

    The following questions refer to this regression equation. (Standard errors in parentheses.) QD = 15,000 - 10 P + 1500 A + 4 PX + 2 I, (5,234) (2.29) (525) (1.75) (1.5) R2 = 0.65 N = 120 F = 35.25 Standard error of Y estimate = 565 Q = Quantity demanded P = Price = 7,000 A = Advertising expense, in thousands = 54 PX =

    Applications of the price elasticity of demand

    1) Why do you think that whenever the government wants to increase their revenue they usually decide to increase the tax on items such as gas, tobacco products and/or alcohol? 2) Why is it unlikely that a firm would sell at a price where its demand curve happens to be price inelastic? 3) Assume the demand for cosmetic or p