The quantity of a product demanded by consumers is a function of its price. The quantity of one product demanded may also depend on the price of other products. For example, if the only chocolate shop in town (a monopoly) sells milk and dark chocolates, the price it sets for each affects the demand of the other. The quantities demanded, q₁ and 92, of two products depend on their prices, p₁ and p2, as follows: 91 = 140-3p1 - 2p2 92 = 160 - 2p1 - 3p2. If one manufacturer sells both products, how should the prices be set to generate the maximum possible revenue? What is that maximum possible revenue? Enter the exact answers. P₁ = i P2 = i The maximum revenue is i
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- Shell has over 13,000 gas stations in the United States. In addition to gasoline, the gas stations also sell convenience items, such as snacks, non-alcoholic beverages, wine, beer, and hot food. Suppose you work for a gas station and your boss asks you to develop a pricing strategy for bottled local wine. The demand function is ? = 100 – 4?, where ? is the monthly quantity demanded of the bottled wine and ? is the price of the bottled wine. The marginal cost per bottle of wine is $5. Complete the following tasks: 1) (Calculating) In the worksheet “Q2 Calculations” of the provided Excel file, enter formulas in columns B-D to calculate Q (quantity demanded), MC (marginal cost), and MR (marginal revenue). Please round your results to one decimal place. Note that the inverse demand function is ? = 25 − 0.25? and that the MR function can be derived from the inverse demand function using the formula introduced in Module 5. You may find it helpful to review the Excel file for Chapter 11.suppose the company continues to manufacture its product in the United States, but now it sells its product in the United States, the United Kingdom, and possibly other countries. The company can independently set its price in each country where it sells. For example, the price could be $150 in the United States and £110 in the United Kingdom. You can assume that the demand function in each country is of the constant elasticity form, each with its own parameters. The question is whether the company can use Solver independently in each country to find the optimal price in this country. (You should be able to answer this question without actually running any Solver model(s), but you might want to experiment, just to verify your reasoning.)6. Elasticity and total revenue The following graph illustrates the weekly demand curve for motorized scooters in Roanoke. Use the green rectangle (triangle symbols) to compute total revenue at various prices along the demand curve. Note: You will not be graded on any changes made to this graph. TOTAL REVEN $700 T 8100 7500 0900 6300 5700 5100 PRICE (Dollars per scooter) 4500 3000 325 8 8 8 8 28 28 28 % 300 275 250 225 200+ 175 150+ 125 100 75 On the following graph, use the green point (triangle symbol) to plot the weekly total revenue when the market price is $50, $75, $100, $125, $150, $175, and $200 per scooter. 25 2300++ 0 0 A A B + Demand emano H on MIM 110 150 135 HHHH++ + 25 50 75 100 125 150 175 200 225 250 275 300 325 PRICE (Dollars per scooter) -A Total Revenue Total Revenue (?) (?)
- The following graph illustrates the market for almonds. It plots the monthly supply of almonds and the monthly demand for almonds. Suppose new gathering technology is invented, allowing growers to produce more crops using the same amount of resources. Show the effect this shock has on the market for almonds by shifting the demand curve, supply curve, or both. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. PRICE (Dollars per ton) 20 16 0 0 10 20 30 Supply Demand QUANTITY (Thousands of tons) 40 50 Demand SupplyOne 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)According to the Winemakers Association of North America, wildfires contributed to the lowest level of wine production in 60 years. This record low production has driven up prices sharply in the US wine market. Meanwhile, the price of microbrew beer increased significantly for the first time in many years. (Assume a cross price elasticity of microbrew beer with respect to wine is Eab = 1.5.) 3.1 Illustrate this observation with one demand and supply graph for the market for California wine and another demand and supply graph for microbrew beer. 3.2 Make sure that your graphs clearly show (1) the initial equilibrium before the decrease in the supply of California wine and (2) the final equilibrium. 3.3 Use arrows to indicate any shifts in the demand and supply curves for each market. 3.4 Label your graphs fully and write an explanation of your work. PLEASE ANSWER ALL THESE QUESTIONS AND DRAW THE GRAPHS FOR ME PLEASE THANK YOU SO MUCH < 3
- An analyst for FoodMax estimates that the demand for its Brand X potato chips is given by ln QdX = 12.14 – 2.8 ln PX + 3.4PY + 0.7 ln AX, where Qx and PX are the respective quantity and price of a four-ounce bag of Brand X potato chips, PY is the price of a six-ounce bag sold by its only competitor, and AX is FoodMax’s level of advertising on Brand X potato chips. Last year, FoodMax sold 7 million bags of Brand X chips and spent $0.42 million on advertising. Its plant lease is $2.1 million (this annual contract includes utilities) and its depreciation charge for capital equipment was $2.8 million; payments to employees (all of whom earn annual salaries) were $0.8 million. The only other costs associated with manufacturing and distributing Brand X chips are the costs of raw potatoes, peanut oil, and bags; last year FoodMax spent $2.8 million on these items, which were purchased in competitive input markets. Based on this information, what is the profit-maximizing price for a bag of…Transport economists Lasse Fridstrøm and Vegard Østli studied the demand for cars in Norway between 2002 and 2016. Regarding gasoline-powered cars, the own-price elasticity was −1.094, and the cross-price elasticities with respect to the prices of gasoline, electricity, and electric cars were −0.71, 0.06, and 0.19 respectively. As for electric cars, the own-price elasticity was −0.99, and the cross-price elasticities with respect to the prices of electricity, gasoline, and gasoline-powered cars were −0.18, 0.38, and 0.35 respectively.a. Referring to the above data, discuss whether gasoline cars and electricity are substitutes or complements.b. Electric cars are more expensive than gasoline cars. Compare the incomes of people who buy electric cars vis-à-vis those who buy gasoline cars.c. Considering the buyers’ incomes, explain why the demand for electric cars is less price elastic than the demand for gasoline cars.d. Why would the short-run demand for gasoline cars be less elastic with…Consider public policy aimed at smoking. Studies indicate that the price elasticity of demand for cigarettes is about 0.5. If a pack of cigarettes currently costs $5 and the government wants to reduce smoking by 30%, it should increase the price by . If the government permanently increases the price of cigarettes, the effect on smoking 1 year from now will be than the effect 5 years from now. Studies also find that teenagers have a higher price elasticity of demand than do adults. Which of the following statements are consistent with this result? Check all that apply. It is legal for adults to consume alcohol, so many choose to spend their money on that good rather than cigarettes. Adults are more likely to be addicted to cigarettes. Teenagers do not have as much income as adults, so they are more price sensitive.
- In one month, a beef burger restaurant sold 2,500 personal beef burger at $2.50 per pizza. When this restaurant increased its price by 20%, its total revenue for the next month increased to $12,500. As a result of this price increase, however, the monthly sales of chicken meat decreased from 2,500 slices to 2,000 slices . Using the arc elasticity method, a) find the price elasticity of demand for this restaurant’s beef burger; and b) find the cross-elasticity of demand for chicken meat with respect to the price of burger. Comment on your result.3. Using the midpoint method The following graph shows two known points (X and Y) on a demand curve for tomatoes. ? 10 9 Demand PRICE Dollars per pound) 0 10 20 30 40 50 00 70 8 100Suppose cigarettes could be purchased for less in neighboring states because cigarette taxes are lower in those states. Group of answer choices Would effect the price elasticity of demand for cigarettes in New York more if the difference in taxes was greater. This would make the price elasticity of demand in New York higher. This would make the price elasticity of demand in New York lower. Would effect the price elasticity of demand for cigarettes in New York less if the difference in taxes was greater.