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Elasticity of demand

3. In the following table, calculate the elasticity of demand for each price range, using the mid-point formula. At what price does the producer maximize revenue? How can the firm use the information contained in the elasticity coefficient to determine pricing policy for profit maximization? Price Quantity

Price elasticity of demand questions

a. A barrier to entry creates an advantage for incumbents over new arrivals. True or false, explain. b. Rent control in New York is a prominent example of price floor. True or false, explain. c. When price is higher than the marginal revenue but lower than the average variable cost, the monopolist makes losses. d

Fantasy pinball machines

The following demand function has been estimated for Fantasy pinball machines: QD = 3,500 - 40P + 17.5Px + 670U + .0090A + 6,500N where P = monthly rental price of Fantasy pinball machines Px = monthly rental price of Old Chicago pinball machines (their largest competitor) U = current unemployment rate in the 10 larges


Chapter 4 7. The director of a theater company in a small college town is considering changing the way he prices tickets. He has hired an economic consulting firm to estimate the demand for tickets. The firm has classified people who go to the theater into two groups and has come up with two demand functions. The demand curves

Economic Elasticities (price, income, cross price)

The market demand for cotton socks is given by: Q=1,000+.5I-400P+200P' where, Q = Annual demand in number of pairs I = Average income in dollars per year P = Price of one pair of cotton socks P' = Price of one pair of wool socks Given that I = $20,000, P=$10, and P'=$5, determine: A. The price elasticity, e(Q,P) B

Analysis a viewpoint - Ford

Viewpoint. According to Henry Ford, "it is better to sell a large number of cars at a reasonably small margin than to sell fewer cars at a larger margin of profit. Bear in mind that when you reduce the price of the car without reducing the quality you increase the possible number of purchases." (a) In 1909, Ford introduced

price adjustment policy

1. Clothing stores affiliated with The Gap, Inc, offer a 14-day "price adjustment" policy: for example, if you purchase a shirt for $80 and it is subsequently marked down to $55, you can bring your receipt back to the store and receive a $25 refund within 14 days of your original purchase. What would stores voluntarily limit the

Mathematical Economics

Question 1: Demand for a product produced by a firm is given by the expression: P = 60 ? 5Q. Fixed cost is 20. Variable costs of producing Q units are VC (Q) = ? Q2 + 16Q. (I) Find expressions for total, average and marginal costs. Find expressions for total, average and marginal revenue. Find an expression for profit. (II) F

In many regions, local governments offer customized automobile license plates...

In many regions, local governments offer customized automobile license plates, also called "vanity tags." In these programs, a driver can choose to pay an additional fee over and above the basic annual fee charged to register a vehicle and, in return, the driver is allowed to choose the letter and number combination for their a

Basic economics questions

1) Define utility and marginal utility? 2) What is the price elasticity of demand? 3) Relate price elasticity to changes in total revenue with a price increase? 4) List and discuss the determinants of price elasticity. 5) How do normal and inferior goods differ? 6) Define technological (or production) efficiency? 7)

Suppose the price of apples rises from $3 a pound to $3.45...

Suppose the price of apples rises from $3 a pound to $3.45 and your consumption of apples drops from 30 pounds of apples a month to 21 pounds of apples. Calculate your price elasticity of demand of apples. What can you say about your price elasticity of demand of apples? Is it Elastic, Inelastic, or Unitary Elastic? Be sure to s

Managerial Economics, MBA program

1) Consider a firm selling two products, A and B, that substitute for each other. Suppose that an entrant introduces a product that is identical to product A. What factors do you think will affect (a) whether a price war is initiated, and (b) who wins the price war? 2) The following table reports the distribution of profits


I have the following data about the demand for Motorola picture phones: (own) price elasticity = -.12 cross-price elasticity with digital cameras = +3 income elasticity = +.15. If the goal of Motorola was to increase total sales revenue (ignoring cost considerations), would it raise or lower its selling price? Why?

Supply and Demand and Elasticity Question

The demand for company X product is given by Q(x) = 12 - 3P(x)+ 4P (y) Suppose good X sells for $3.00 per unit and good Y sells for $1.50 per unit. a. Calculate the cross-price elasticity of demand between goods X and Y at the given prices. b. Are goods X and Y substitutes or complements? c. What is the own price elastici

Pricing analysis

Please see attached. --- REQUIREMENTS 1 Excel Spreadsheet - Completed Customer Demand Data spreadsheet 1 Memo Report - Analysis of Current and Proposed Pricing Strategy for Profitability ? Include an assessment of whether the current fare maximizes profits. If not, identify the fare that should be charged. Give evide

Demand and supply, indifference curve analysis, cost function

1. Use any figures for prices and quantities to calculate and analyze the arc elasticity of demand relative to price for a product, and extend the analysis to showi ts implications on a product decision. 2. Using fully explained indifference curve analysis, derive a demand curve for a product. As part of your answer, explain

Problem situation (Mgrl. Econ.)

Given the following demand function: Price Quantity Arc Elasticity Total Revenue Marginal Rev. P Qd(Units) Ed ($) ($/Unit) $12 30 n.a. _________ n.a.

Managerial Economics - Applying Concepts/Mathematics

--- 1. In 1998 the fare on Chicago's transit system was 60 cents per ride. This resulted in 711.6 million trips being taken on the system. In 1999 the fare was increased to 80 cents and ridership declined to 692.4 million trips. a. Compute the arc price elasticity of demand for transit ridership in Chicago assuming that

Managerial Economics - Application

--- 1. The Potomac Range Corporation manufactures a line of microwave ovens costing $500 each. Its sales have averaged about 6,000 units per month during the past year. In August, Potomac's closest competitor, Spring City Stove Works, cut its price for a closely competitive model from $600 to $450. Potomac noticed that its

Advertising & Elasticity

How would you explain the following? KinderCare operates the only daycare center in an exclusive neighborhood and they are making a large economic profit. The owners believe that new day cares will soon learn of this highly profitable market & try to enter the market so they decide to begin spending immediately a large amount


If you were asked to estimate the market demand curve and figure the existing Price elasticity of demand for a business' product, what steps would you need to take and what problems might you come across in collecting the data?Would you need to make any simplifing assumptions and what would those be? Would you have problems in

Price Elasticity for Z-Best Pizza

Z-Best Pizza recently decided to raise its regular price on large pizzas from $9 to $12 following increases in the cost of labor and materials. Unfortunately, sales dropped sharply from 8,100 to 4,500 pizzas per month. In an effort to regain lost sales, Z-Best ran a coupon promotion featuring $5 off the new regular price. Cou

Price Elasticity

I am trying to determine own company and cross price elasticities. Here are my numbers: Own company: demand starts at 80 units, increases to 96 price starts at $1.33/unit and decreases to .97 Other company: demand starts at 80 units, increases to 96 price starts at 1.49 and decreases to 1.10 Thank you.

I need detailed answers illustrated with graphs.

1.By using the appropriate graph , can you explain and illustrate the transfer of consumer surpulus from a perfectly competitive firm to a monopolist. Please use the same graph to also show and explain the dead weight loss which results from monopoly. 2.By using a graph, can you illustrate the long run equilibirium of a firm

Multiplicative Exponential Demand Function

A regression model is being used to estimate demand for a type of candy. The following multiplicative exponential demand function is being used; Qd = 6280P^-2.15 A^1.05 N^3.70 ^ = raising to a power Qd = Qty demanded of candy P = price of candy per piece A = Advertising expenditure N = Population of children under th

Monopolistically: profit-maximizing prices

Please help with the following problem. A monopolistically competitive firm finds that the elasticity of demand facing its brand is -1.5, while its rival faces an elasticity of -2 for its brand. Both firms have a marginal cost of $5 per unit. Using the pricing rule of thumb, determine the profit-maximizing prices both


Help me with the questions below? 1. When price is above the equilibrium level (as with a price floor), suppliers offer more than demanders wish to buy. T F 2. Suppose the numbers in parenthesis represent two points on a line: (59 billion quarts; $4) and (78 billion quarts; $6). The line is likely a a. production poss

4 econ. questions...

Just answers the questions below using some economic concepts. 1.) Find a real world example depicting price elasticity of demand. Be sure to explain how the concept of price elasticity demand would impact the seller's revenues should the seller choose to raise the price of the product. Please do not use the example for the q