At the beginning of the year 2021, three friends, Ebo, Michael and Joseph decided to set up acompany that produces a special kind of fruit juice called BB fruit juice in a city called St.Botch. As fresh graduate from the University of Professional Studies, Accra, you wereemployed as the firm's general manager in charge of the day to day running of the company.In order to make informed decisions about the firm's product, you employed an economist,who estimated the demand curve of the firm's product by using information from 30supermarket as follows:Q$ = 99.5 – 2.5P, + 1.25P, – 0.21 + 0.15N + 0.04AWhere Qg is the quantity demanded of BB fruit juice in bottles, P, is the per pottle price of BBfruit juice, P, is the per pottle price of Blue Sky, I is the per capita income of the people of St.Botch, N is the number of consumers and A is amount of money the company spends onadvertising.In addition, the economist also estimated the supply function for the product as:Qi = -78 + 5.5P, – 1.75P, + 0.25S + 0.03RWhere Q is the quantity supplied of BB fruit juice in bottles, Pe is the per pottle price of BBfruit juice, P, is the per unit price of labour, S is the number of suppliers and R is the amountof raw materials used (in kg).Now suppose a bottle of BB fruit juicy is sold for GH¢20, two bottles of Blue Sky are sold forGH¢60, the per capita income of the people of St. Botch is GH¢800, the company spendsGH¢1,000 on advertising. In addition, there are 500 consumers and 40 suppliers, the per unit price oflabour is GH¢40, and a total of 1000kg of raw materials are used for the production. Calculate the amount of Botch Potato bought in the market.ii)i)Estimate the own price elasticity of demand.iii) What type of demand curve does Botch Potato has?iv)What will be the firm's pricing policy?v)What type of good is BB fruit juice?vi)What type of relationship exist between BB fruit juice and Blue Sky?vii) Assess the probable impact on your firm if per capita income of the city isdecreases by &%.

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i) Calculate the amount of Botch Potato bought in the market. ii) Estimate the own price elasticity of demand. iii) What type of demand curve does Botch Potato has? What will be the firm's pricing policy? iv) v) What type of good is BB fruit juice? vi) What type of relationship exist between BB fruit juice and Blue Sky? vii) Assess the probable impact on your firm if per capita income of the city is decreases by 8%

i) Calculate the amount of Botch Potato bought in the market. ii) Estimate the own price elasticity of demand. iii) What type of demand curve does Botch Potato has? What will be the firm's pricing policy? iv) v) What type of good is BB fruit juice? vi) What type of relationship exist between BB fruit juice and Blue Sky? vii) Assess the probable impact on your firm if per capita income of the city is decreases by 8%

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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