MN.52. Eastman Publishing Company is considering publishing an electronic textbook about spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design, and web siteconstruction is estimated to be $156,000. Variable processing costs are estimated to be $9 per book. The publisher plans to sell single-user access to the book for $41.Through a series of web-based experiments, Eastman has created a predictive model that estimates demand as a function of price. The predictive model is demand 4,000 -6p, where p is the priceof the e-book.(a) Construct an appropriate spreadsheet model for calculating the profit/loss at a given single-user access price taking into account the above demand function. What is the profit estimated by yourmodel for the given costs and single user access price (in dollars).(b) Use Goal Seek to calculate the price (in dollars) that results in breakeven. (Round your answer to the nearest cent.)(c) Use a data table that varies price from $50 to $400 in increments of $25 to find the price (in dollars) that maximizes profit.

Total cost is Fixed cost + Total variable cost To find the profit or loss we need to check the total…

(a) Construct an appropriate spreadsheet model for calculating the profit/loss at a given single-user access price taking into account the above demand function. What is the profit estimated by your model for the given costs and single user access price (in dollars). (b) Use Goal Seek to calculate the price (in dollars) that results in breakeven. (Round your answer to the nearest cent.) (c) Use a data table that varies price from $50 to $400 in increments of $25 to find the price (in dollars) that maximizes profit.

(a) Construct an appropriate spreadsheet model for calculating the profit/loss at a given single-user access price taking into account the above demand function. What is the profit estimated by your model for the given costs and single user access price (in dollars). (b) Use Goal Seek to calculate the price (in dollars) that results in breakeven. (Round your answer to the nearest cent.) (c) Use a data table that varies price from $50 to $400 in increments of $25 to find the price (in dollars) that maximizes profit.

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Inflation and Purchasing Power Theory

In economic terms, Inflation refers to the increase in the costs of various commodities which are used in daily lifestyle like food, clothes, transport, etc. over a specific time. It may lead to a fall in the purchasing power of the people and also affects the exchange rate of the currency because of the price increase. As the purchasing power falls the unit of the currency in the economy falls. When the prices of the commodities are decreased, then the purchasing power of the consumers will rise, then it will lead to deflation and changes the currency of the base economy to that of the foreign economy which will lead to change in exchange rates.

Question

MN.52.

Eastman Publishing Company is considering publishing an electronic textbook about spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design, and web site
construction is estimated to be $156,000. Variable processing costs are estimated to be $9 per book. The publisher plans to sell single-user access to the book for $41.
Through a series of web-based experiments, Eastman has created a predictive model that estimates demand as a function of price. The predictive model is demand 4,000 -6p, where p is the price
of the e-book.
(a) Construct an appropriate spreadsheet model for calculating the profit/loss at a given single-user access price taking into account the above demand function. What is the profit estimated by your
model for the given costs and single user access price (in dollars).
(b) Use Goal Seek to calculate the price (in dollars) that results in breakeven. (Round your answer to the nearest cent.)
(c) Use a data table that varies price from $50 to $400 in increments of $25 to find the price (in dollars) that maximizes profit.

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Q9. The profit levels of a company for varying levels of sales is shown in the table below: (All values in £1000) Sales 300 290 280 255 260 Profit 50 60 25 -10 10 A prospective investor is interested in seeing how the rate of profit is related to Sales and so produces the incomplete table below: Sales 300 290 280 255 260 profit rate Which is the row with the correct values of the profit rate? А. profit rate 22.7% 16.7% 12.4% -6.9% 4.44% В. profit rate 16.7% 20.7% 8.9% -3.9% 3.85% profit rate profit rate С. 18.2% 16.3% 4.6% -4.5% 5.58% D. 9.1% 36.3% 5.8% -0.5% 3.44% Ο Α. Α В. В С. С O D. D
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In the island nation of Autarka, cardboard boxes are manufactured by four rms: Andrew'sIndustries, Brett's Boxes, Carla's Cardboard, and Delia's Durables. In Autarka, cardboard boxes are sold in bundles of 100. At present, the market price for a bundle of boxes is $30. The technology for manufacturing cardboard boxes is readily available and common to all manufacturers. The cost of plant and machinery for a rm in the box manufacturing business is $7,000,000 per year. The labour, material, and energy cost of producing abundle of 100 boxes is $20. A market study indicates that demand for cardboard boxes is given by the function,P= 40 - Q/500,000 ;where P represents the price of a bundle of 100 boxes, and Qis the total number of bundles of boxes sold each year. Using the information provided in the scenario, derive a total cost function fora typical cardboard box manufacturer. Use QA to denote the quantity produced by thetypical firm.
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