6. Suppose that a firm offers customers either (1) the ability to buy any quantity they desire for $24 per unit or (2) a price of $18 per unit for 15 or more units. What type of pricing strategy is this?
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- 4128. Substitutes, complements, or unrelated? You work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products: guppy gumdrops, frizzles, and kipples. All of these products have been on the market for some time, but, to entice better sales, Run-of-the-Mills wants to try a new advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know that complements are typically consumed together while substitutes can take the place of other goods. Run-of-the-Mills provides your marketing firm with the following data: When the price of guppy gumdrops decreases by 8%, the quantity of frizzles sold decreases by 6% and the quantity of kipples sold increases by 8%. Your job is to use the cross-price elasticity between guppy gumdrops and the other goods to determine which goods your marketing firm should advertise together. Complete the first column of the following…
- None4. Calculate demand functions with different intercept and draw on graph. Qd = 1,400 – 10P Qdz = 1,700 – 10P Qd= 1,100 – 10P 160 140 Price Demandz = Demand; = 120 1,400 – 10P 1,700 – 10P | 1,100 – 10P 100 Demand = 20 80 40 60 60 80 100 40 120 140 20 160 400 500 600 700 S00 900 1000 1100 1200Carlos's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Carlos produced four fire engines, but he has decided to increase production to five fire engines. The following graph shows the demand curve Carlos faces. As you can see, to sell the additional engine, Carlos must lower his price from $105,000 to $90,000 per fire engine. Note that while Carlos gains revenue from the additional engine he sells, he also loses revenue from the initial four engines because he sells them all at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial four engines by selling at $90,000 rather than $105,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $90,000. PRICE (Thousands of dollars per fire engine) 150 135 - 120 106 60 45 15 0 + Carlos 0 1 True + 2 False Demand + 6 3 4 5 7 QUANTITY (Fire…
- 5) Calculate the arc price elasticity of demand for wheat in the two situations below: Farmer Brown's Wheat Old price; $3.40/bu Old quantity; 28,000 bu The Wheat Market Old price; $3.40/bu Old quantity; 2.5 billion bu New price; $3.20/bu New price; $3.20/bu New quantity; 2.525 billion bu New quantity; 35,000 bu Can you account for the difference in elasticities?What is the current price of gasoline and how many gallons of gasoline do you currently buy per month? How many gallons would you buy next month and how would your behavior change if the price fell by $1.25 per gallon? Also, based on that information, what is your price elasticity of demand for gasoline? Be sure to show how you calculated your price elasticity of demand. current price of gas = $2.53 gallons of gas per month = 72 gallons no change for next month On the average I fill my tank up 3 times a month each time I go I spend $60-$65do fast
- 8. Substitutes, complements, or unrelated? You work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products: penguin patties, raskels, and kipples. All of these products have been on the market for some time, but, to entice better sales, Run-of-the-Mills wants to try a new advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know that complements are typically consumed together while substitutes can take the place of other goods. Run-of-the-Mills provides your marketing firm with the following data: When the price of penguin patties decreases by 1%, the quantity of raskels sold decreases by 18% and the quantity of kipples sold increases by 3%. Your job is to use the cross-price elasticity between penguin patties and the other goods to determine which goods your marketing firm should advertise together. Complete the first column of the following…1.(a) Derive own-price elasticity of demand (eii), income elasticity of demand (hi) and cross-price elasticity of demand (eij) for the Cobb-Douglas Utility Function. (b) With respect to Cobb Douglas preferences, what happens to the demand for each of two products (x and y) when the price of product y increases, as a result of: (i) the substitution effect; (ii) the income effect; and, (iii) the overall price effect?4 In order to price-discriminate, a firm must be able to separate its customers who have different elasticities of demand. A firm can earn. more revenue by charging higher prices to consumers with relatively inelastic demand, and lower prices to consumers with relatively elastic demand. Consider the different customers listed below. Which ones have relatively inelastic demand, and which ones have relatively elastic demand? Items (4 items) (Drag and drop into the appropriate area below) Jordan goes to an out-of-state university. Categories The Jones family travels for a vacation. Robert goes to a matinee movie. Relatively elastic Drag and drop here Jerry buys multiple items (soda, popcorn, candy) from the concession stand at a movie theater. Relatively inelastic Drag and drop here