The Camera Shop sells two popular models of digital SLR cameras. The sales of these products are not independent; if the price of one increases, the sales of the other increases. In economics, these two camera models are called substitutable products. The store wish o establish a pricing policy to maximize revenue from these products. A study of price and sales data shows the following relationships between the quantity sold (N) and price (P) of each model. NA = 165 -0.7PA +0.45PB Ng = 322 +0.08PA - 0.6PB (a) Construct a model for the total revenue and implement it on a spreadsheet. What is the profit (in dollars) predicted by your model when the price of model A is PA = $260 and the price of model B is Pg = $320. $ 81276 ✓ (b) Develop a two-way data table to estimate the optimal prices for each product in order to maximize the total revenue. Vary each price from $250 to $500 in increments of $10. P₁ = 300 X PR =

The Camera Shop sells two popular models of digital SLR cameras. The sales of these products are not independent; if the price of one increases, the sales of the other increases. In economics, these two camera models are called substitutable products. The store wish o establish a pricing policy to maximize revenue from these products. A study of price and sales data shows the following relationships between the quantity sold (N) and price (P) of each model. NA = 165 -0.7PA +0.45PB Ng = 322 +0.08PA - 0.6PB (a) Construct a model for the total revenue and implement it on a spreadsheet. What is the profit (in dollars) predicted by your model when the price of model A is PA = $260 and the price of model B is Pg = $320. $ 81276 ✓ (b) Develop a two-way data table to estimate the optimal prices for each product in order to maximize the total revenue. Vary each price from $250 to $500 in increments of $10. P₁ = 300 X PR =

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: . In what sense is health care an investment? In whatsense is it pure consumption?

A: Healthcare is dissimilar from other services because the definition is not clear. Every customer in…

Q: Mcdonald’s, a big burger joint, is charging $6 for its very famous Big Mac hamburger and selling…

A: PED i.e price elasticity of demand measures the degree of responsiveness of demand of a commodity…

Q: A manufacturer sells two products, A and B and had raised the prices of the two products recently to…

A: In economics, price elasticity of demand is a measure of the change in a product's consumption when…

Q: a. Using the midpoint method, what is the price elasticity of demand when the price changes from…

A: Elasticity can be calculated by using the mid point method. It is given by the formula Elasticity =…

Q: 3. A company wholesales shampoo in a particular city. Their marketing research department…

A: The law of supply and demand joins two fundamental economic standards portraying how changes in the…

Q: A pizza restaurant raises the price of their pizza by 20%. As a result, they witness a 10% decrease…

A: Price elasticity calculated as the percentage change in quantity demanded divided by the percentage…

Q: In a small town, there are two bakeries that produce similar types of bread. Bakery A has been in…

A: Price elasticity of demand is a measure of the responsiveness of the quantity demanded of a product…

Q: suppose the company continues to manufacture its product in the United States, but now it sells its…

A: The relationship between the quantity of an item or service that consumers demand and the variables…

Q: An analyst for FoodMax estimates that the demand for its "Brand X" potato chips is given by: InQx =…

A: Answer;

Q: Beowoof is the only kennel for two neighboring counties, East Liverpoodle and West Liverpoodle. The…

A: Price elasticity of demand is the responsiveness of quantity demanded change due to change in price.…

Q: The Hevishus Corp. (HC) is a profit-maximizing company that owns the only cement factory in…

A: 1)In Portland,price would be charged higher because it is more elastic demand than Charlestone.

Q: The marketing director of the Reicken Furniture Company has determined that the demand curve for one…

A: To solve this given question, use the concept of price elasticity of demand. Price Elasticity of…

Q: AlphaGas is a retail station which sells gasoline to consumers at the per-gallon price Pr. It is the…

A: The profit maximization condition refers to the economic principle that a firm should produce at a…

Q: The Camera Shop sells two popular models of digital SLR cameras. The sales of these products are not…

A: The matrix used to determine how the outcome changes when two input variables change concurrently…

Q: BigSwaba Corp produces virus home test kits which it sells in the market. It pays a marketing…

A: Given demand function P=48+m^0.5-0.5q TC=200+0.5q^2+m

Q: The cross - price elasticity of demand between Texaco gasoline and Mobil gasoline sold at the same…

A: The issue is to determine the cross-price elasticity of demand between Texaco gas and Mobil fuel…

Q: 1. Chez What recently opened a stand in between the Commons and the Library. They sell mostly…

A: Demand curve is the downward sloping curve. Suppply curve is the upward sloping curve. The…

Q: The MacDonald sells two popular packages of breakfast all day long: Mac A and Mac B. The sales of…

A: 2 products are sold:Mac AMac BBoth are substitute goods. If the price of one product increases then…

Q: Online the timing and tailoring of prices to specific products is the key to successful pricing in…

A: Elastic demand is the state in which demand adjusts in response to a small change in price. Price…

Q: You are the producer of computer components. There are two markets – foreign and domestic – with…

A: We know, that if a single monopolist sells a single product, which is computer components in this…

Q: Disney operates two theme parks in California: Disneyland and California Adventure. Disney has long…

A: In economics, profit maximization happens when there is a maximum difference between total TR and…

Q: Demand for Corn Flakes is: P = 24-Q. Supply of Kellogg's Corn Flakes is: P = 2+ Q. Now a generic…

A: Given: The demand for Corn Flakes is: P = 24-Q The supply for Corn Flakes is: P = 2+Q A generic…

Question

The Camera Shop sells two popular models of digital SLR cameras. The sales of these products are not independent; if the price of one increases, the sales of the other increases. In economics, these two camera models are called substitutable products. The store wishes
to establish a pricing policy to maximize revenue from these products. A study of price and sales data shows the following relationships between the quantity sold (N) and price (P) of each model.
(a) Construct a model for the total revenue and implement it on a spreadsheet. What is the profit (in dollars) predicted by your model when the price of model A is PA = $260 and the price of model B is PB = $320.
$ 81276
NA = 165 -0.7PA + 0.45PB
NB = 322 +0.08PA - 0.6PB
(b) Develop a two-way data table to estimate the optimal prices for each product in order to maximize the total revenue. Vary each price from $250 to $500 in increments of $10.
300
X
PB
=

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction

VIEW

Step 2: Answer and Explanation

VIEW

Step 3: Answer and Explanation

VIEW

Solution

VIEW

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Suppose you were shown a demand curve for bananas and were asked to calculate price elasticity of demand. After doing so, you come up with 1.67 (absolute value). A classmate was asked to derive price elasticity of demand on the identical demand curve and got 0. 75 (absolute value). A bit perplexed, your classmate asks the professor which answer is right? The professor checks both calculations and says, "They're both right." ls this possible? If so, how and why?
Suppose a research report has estimated the demand for a firm's product as ln QXd = 7 − 1.5 ln PX + 2 ln PY − 0.5 ln M + ln A where:Px = $15Py = $6M = $40,000, andA = $350 a. Determine the own price elasticity of demand, and state whether demand is elastic, inelastic, or unitary elastic. Own price elasticity: -1.5 Demand is: elastic b. Determine the cross-price elasticity of demand between good X and good Y, and state whether these two goods are substitutes or complements. Cross-price elasticity: 2 These two goods are: Substitutes. c. Determine the income elasticity of demand, and state whether good Xis a normal or inferior good. Income elasticity: Good X is: d. Determine the own advertising elasticity of demand.
Suppose you did an analysis regarding the sensitivity of tea to the price of tea. You estimated the price elasticity of demand to equal 0.5. Explain this finding
Problem 03-06 (algo) You are the manager of a firm that receives revenues of $40,000 per year from product X and $80,000 per year from product Y. The own price elasticity of demand for product X is -1.5, and the cross-price elasticity of demand between product Yand X is -1.8. How much will your firm's total revenues (revenues from both products) change if you increase the price of good X by 1 percent? Instructions: Enter your response rounded to the nearest dollar. If you are entering a negative number, be sure to use a (-) sign. GA
As the price of bananas fell from $0.60 to $0.40 per pound, the quantity demanded rose from 300 pounds of bananas consumed to 500 pounds of bananas consumed. The absolute value of the price elasticity of demand using the midpoint method is Mutiple Choice 0.80 150 125 O 100
8.4 Price-Volume Pricing (Figures 8-23 to 8-25) The price elasticity for personal computers is estimated to be –2. For the PC manufacturer shown, evaluate the sales and profit impact of a 10% price increase and a 10% price decrease. For each pricing strategy, determine the break-even market share and discuss the profit risk associated with it.
One of the growers is excited by the price increase caused by the blight because he believes it will increase revenue in this market. As an economics student, you can use elasticities to determine whether this change in price will lead to an increase or decrease in total revenue in this market. Using the midpoint method, the price elasticity of demand for soybeans between the prices of $10 and $12 per bushel is , which means demand is between these two points. Therefore, you would tell the grower that his claim is , because total revenue will as a result of the blight. Confirm your previous conclusion by calculating total revenue in the soybean market before and after the blight. Enter these values in the following table. Before Blight After Blight Total Revenue (Millions of Dollars)
Mike's Mechanic Shop increased its total monthly revenue from $6,500 to $7,200 when it reduced the price of an oil change from $65 to $50. The price elasticity of demand for Mike's Mechanic Shop is [NOTE: Total Revenue = Price x Quantity] Group of answer choices 1.38 0.72 0.39
question b thx
You are in management at Superior Industries Inc., the only company in the world sells the popular consumer item widgets. A rival company makes wodgets which are a weak competitor to your product. A small consulting company with MBA students from NotUNB have written a report for Superior Industries with the important statement, “Our estimates show that the demand elasticity for widgets is elastic (-1.8 or 1.8 in absolute value) and we strongly recommend that Superior Industries lower its price to increase revenues and market share.” In another sense, their statement misses the point. Explain.
Suppose the consumption function is C-$700 billion +0.8Y and the government wants to stimulate the economy. By how much will aggregate demand at current prices shift initially (before multiplier effects) with Mc raw Instructions: Enter your responses as a whole number. a. a $30 billion increase in government purchases? $ billion b. a $30 billion tax cut? $ c. a $30 billion increase in income transfers? billion $ What will the cumulative AD shift (after multiplier effects) be for d. the increased government spending? $ e. the tax cut? F stly clear billion billion billion f the increased transfers? $[ billion ▬▬▬ Q Search D < Prev W 1 of 5 C
The government decides to pass a law that requires all automobiles to have side and rear airbags. This law will increase the production costs by $3500 for all automobiles. If the demand for automobiles is highly inelastic, the carmakers will share this cost equally with car-buyers O pass almost all of this cost along to car-buyers pass very little of this cost along to car-buyers O stop producing automobiles Question 8 The income elasticity of demand for peaches has been estimated to be 1.43. If income grows by 15 percent in a period, how will that affect total revenue from peaches in that period, all other things unchanged? Total revenue will rise. Total revenue will fall. Total revenue will remain unchanged. O Not enough information is given to answer the question.