The demand function for apples is the following. Qn = 10 – Pn + 0.2Y +0.5 Pc – 2Ps + 0.2A Where: Qn = annual sales of apples (millions of kilos) Pn = price of apples (£1 per kilo) Y = disposable income in the UK £trillions (£10 trillions) Pc = price of a pies £ per kilo (£2 per kilo) Ps = price of pear (£2 per kilo) A = advertising measured in hundreds of thousands of £5 (use as 5 in your calculations) What direction should the apple producers move the price if they wanted to maximize their revenue? a. There is not enough information. b. Don't change the price. c. Cut the price. d. Raise the price.
The demand function for apples is the following. Qn = 10 – Pn + 0.2Y +0.5 Pc – 2Ps + 0.2A Where: Qn = annual sales of apples (millions of kilos) Pn = price of apples (£1 per kilo) Y = disposable income in the UK £trillions (£10 trillions) Pc = price of a pies £ per kilo (£2 per kilo) Ps = price of pear (£2 per kilo) A = advertising measured in hundreds of thousands of £5 (use as 5 in your calculations) What direction should the apple producers move the price if they wanted to maximize their revenue? a. There is not enough information. b. Don't change the price. c. Cut the price. d. Raise the price.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
The demand function for apples is the following.
Qn = 10 – Pn + 0.2Y +0.5 Pc – 2Ps + 0.2A
Where:
Qn = annual sales of apples (millions of kilos)
Pn =
Y = disposable income in the UK £trillions (£10 trillions)
Pc = price of a pies £ per kilo (£2 per kilo)
Ps = price of pear (£2 per kilo)
A = advertising measured in hundreds of thousands of £5 (use as 5 in your calculations)
What direction should the apple producers move the price if they wanted to maximize their revenue?
a. There is not enough information.
b. Don't change the price.
c. Cut the price.
d. Raise the price.
Expert Solution
Step 1
Ans) the correct option is d) Raise the price.
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