QUESTION 1Firms 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 someinformation 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 belowshows 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 grossmargin for each firm.FirmBaselineABCPrice per Cup$3.50$3.00$4.00$2.50Cups Sold1,0001,1408301,500Revenue$3,500$000COGS @ $0.35 per Cup$350$0$0$0Gross Margin$3,150$0$0$0Coffee 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? $ 0What will be their new gross margin if they raise their price from $4.00 to $4.10 and demand decreases by 2%. $0Taking into consideration only these financial results, what should they do?(select option)If they wanted to increase the price but try to maintain the same number of cups sold what might they consider doing (Ctrl- or Cmd-click to select more than one)?

COGS stands for "Cost of Goods Sold". It refers to the direct costs incurred in producing the goods…

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 с 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 Taking into consideration only these financial results, what should they do? (select option) 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? $ o What will be their new gross margin if they raise their price from $4.00 to $4.10 and demand decreases by 2%. $0 #

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 с 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 Taking into consideration only these financial results, what should they do? (select option) 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? $ o What will be their new gross margin if they raise their price from $4.00 to $4.10 and demand decreases by 2%. $0 #

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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