2. Given the constant elasticity demand function as: P = apb where b is the elsticity of demand a. Show that Marginal Revenue of this function is proportional to the price (let K = (¹/). To simplify the equation. b. calculate the Marginal Revenue when equilp = b = -2 and when b=-10. c. what does your answer mean in terms of revenue facing the firm? d. If b = -α what would this imply for Marginal Revenue and Total Revenue of the firm. e. Explain how Marginal Revenue and profit maximization would be affected if

2. Given the constant elasticity demand function as: P = apb where b is the elsticity of demand a. Show that Marginal Revenue of this function is proportional to the price (let K = (¹/). To simplify the equation. b. calculate the Marginal Revenue when equilp = b = -2 and when b=-10. c. what does your answer mean in terms of revenue facing the firm? d. If b = -α what would this imply for Marginal Revenue and Total Revenue of the firm. e. Explain how Marginal Revenue and profit maximization would be affected if

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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c. Describe quantity and revenue responses to price changes when the price elasticity of demand (e) takes on the following values: (1) e = 0, (ii) 0 > e > -1, (iii) e = -1, (iv) e < -1
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QUESTION 1 Firms A, B, and C were all selling 1,000 cups of coffee per day at $3.50 per cup, but in the following week they all changed their prices. This gave their managers some information about the elasticity of demand in their local market, though they have to be careful to recognize that other factors might also have affected demand. The table below shows the change in sales as a result of their new prices; they made no other changes. Complete the table by calculating the revenue, cost of goods sold (COGS), and gross margin for each firm. Firm Baseline A B C Price per Cup $3.50 $3.00 $4.00 $2.50 Cups Sold 1,000 1,140 830 1,500 Revenue $3,500 $0 0 0 COGS @ $0.35 per Cup $350 $0 $0 $0 Gross Margin $3,150 $0 $0 $0 Coffee prices are going up, and Firm B is trying to decide whether to pass on to customers a cost increase of 10¢ per cup-to $0.45 per cup. What will be their new gross margin if they don't pass on the cost increase and demand remains unchanged? $ 0 What will be their new…
What is the price elasticity of demand at the profit-maximizing price for a company that has demand function Q = 140 - 0.2P and cost function C = 100Q? A. -1/5B. -1C. -4/3D. -2
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d) Consider a demand curve given by P = AQ 0.25 where P and Q represent price and quantity demanded respectively, and A is a positive constant. Show that the price elasticity of demand is constant, for all values of4, and is always equal to 4. Find the marginal revenue function and sketch the demand curve and its associated marginal revenue curve.
Asap PLEASE ANSWER ALL FAST AND ACCURATELY. I WILL GIVE THUMBS UP/UPVOTE If the elasticity of demand is Ed = 1.5 and the elasticity of supply is Es = 2.5 then, Calculate the pass-through fraction of the tax that is paid by the buyers in the market. Show all formulas that you use. Graphically depict a perfectly competitive firm earning economic losses. Be sure to label all of your curves
2. The demand function for bottled water from Stillwater Springs is Q=25-10P + 51 Where P = the price of a 36-bottle case of the water and I = Average per capita income (in thousands of dollars). a. If I = 15 thousand dollars, what is the demand curve for bottled water? Q: = b. At P= $4, what is the point price elasticity of demand? What can you say about the profitability of a water sale? EQxPx A sale will increase profits/ reduce profits/ have an indeterminate effect on profits (Circle one) =
5. Consider the demand function given by 3q + 4p = 10, where p denotes the unit price for a certain product and q the amount sold. a. Find the function that gives the revenue r in terms of the quantity q. b. What is the average rate of change of revenue with respect to quantity when q = 0.75 and Aq=0.1? c. Suppose that the calculation in b. is made with Aq equal to 0.01, 0.001, 0.0001, ... What is the limit value of this calculation called? (Give the mathematical name as well as the economic name.) d. What is the notation used for this limit value? e. Calculate the limit value. f. Find the point elasticity of demand for p = 1 and determine whether demand is (perfectly) inelastic, is (perfectly) elastic or has unit elasticity. g. Use your answer to question f. to approximate the change in demand when the price of 1 is increased by 0.25%. h. What can you derive from your answer to question f. about the change in revenue when the price is slightly increased starting from p=1? i. Find the…
The equation for total revenue for a particular product when Q items are produced is: TR = -11x2 + 44000x At what quantity produced will the elasticity of demand be unitary? a.2000 b.500 c.1500 d.1000 e.Cannot be determined from the information given
6 At $182, a firm can sell 19,310 stereo earphones (3.5 mm for android). These are premium earphones, guaranteed for 5 years. At this price, elasticity is estimated at 0.4. What is the change in total revenue (+ or -) if the firm drops price by 11%?