Illustrate using an appropriate diagram [see sample below] where the Crocs online store in Australia [https://www.crocsaustralia.com.au/] sets the average price of a pair of Classic Clog to maximise profit. And within that diagram, explain ‘Gains from trade’ and ‘Deadweight Loss’. In your diagram, assume at the profit-maximising point, the average price of the Classic Clog is $60, and the unit cost is $35. Determine whether the PED is more elastic or inelastic Use hypothetical values (rough guesses) relying on intuition for quantities sold (Q) per monthOnce your diagram is complete (and properly labelled), explain ‘Gains from trade’ and ‘Deadweight Loss’ associated with your diagram.

The excess acquired by consumers is addressed by the space beneath the demand bend and over the even…

Answered: Illustrate using an appropriate diagram…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Illustrate using an appropriate diagram [see sample below] where the Crocs online store in Australia [https://www.crocsaustralia.com.au/] sets the average price of a pair of Classic Clog to maximise profit. And within that diagram, explain ‘Gains from trade’ and ‘Deadweight Loss’.

In your diagram, assume at the profit-maximising point, the average price of the Classic Clog is $60, and the unit cost is $35.
Determine whether the PED is more elastic or inelastic
Use hypothetical values (rough guesses) relying on intuition for quantities sold (Q) per month
Once your diagram is complete (and properly labelled), explain ‘Gains from trade’ and ‘Deadweight Loss’ associated with your diagram.

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