Managerial Economics: A Problem Solving Approach
5th Edition
ISBN: 9781337106665
Author: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher: Cengage Learning
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Chapter 12, Problem 12.5IP
To determine
The reason for the continuous increase in the
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price that will result in 15 percent rise in its demand.
Type the correct answer in the box. Spell all words correctly.
Vivian conducted market research on her company’s products. She found that after the company raised the price of its product by $1.50, the demand in the uptown region remained the same with only minor fluctuations. However, she found that the demand in the downtown region dropped by 20 percent after the price change. How should Vivian take these demands into consideration?
In a situation where demand differs in different areas, Vivian should consider the
demand.
Answer the following questions:
What product do you use that you would use regardless of the price?
Why?
Is this related to price elasticity of demand, or is it personal preference?
Provide the URL for this product so we can learn more about it.
Chapter 12 Solutions
Managerial Economics: A Problem Solving Approach
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- Read the Netflix Pricing Case and answer the questions below. First, calculate the percentage increase in the relevant price from the end of Q1, 2016 to the end of Q3, 2016. Second, assume that Netfix had decided to postpone their price increase in May 2016 for a year. Calculate what it is expected to have happened to their Membership/Quantity numbers from the end of Q1, 2016 to the end of Q3, 2016. These will be their "expected" quantities without the price increase. Third, Calculate the percentage change in quantity with and without the price change Fourth, calculate Netflix's Price Elasticity of demand using the period from the end of Q1, 2016 to the end of Q3, 2016, using your previous calculations. Fifth, discuss how confident you are about your calculation and how it could be improved. Sixth, what is the expected effect of the price increase upon Netflix's Revenue; why? Seventh, what is the expected effect upon profits; why?. Seventh, can you explain the reaction of…arrow_forwardAverage visits per week equal 640 when the copayment is $40 and 360 when the copayment rises to $60. Calculate the percentage change in visits, percentage change in price, and price elasticity of demand.arrow_forwardhow rise in price affect the demand for personal computerarrow_forward
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