Principles of Microeconomics, 7th Edition (MindTap Course List)
7th Edition
ISBN: 9781285165905
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 12, Problem 1QR
To determine
The trend of government tax revenue over the past century.
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8. The current price of 3M stock is $87 per share. The previous dividend paid was $5.96, and
the next dividend is $6.25, assuming a growth rate of 4.86% per year.
What is the forward (next 12 months) dividend yield?
Show at least two decimal places, as in x.xx%
%
Joy's Frozen Yogurt shops have enjoyed rapid growth in northeastern states in recent years. From
the analysis of Joy's various outlets, it was found that the demand curve follows this pattern:
Q=200-300P+1201 +657-250A +400A;
where Q = number of cups served per week
P = average price paid for each cup
I = per capita income in the given market (thousands)
Taverage outdoor temperature
A competition's monthly advertising expenditures (thousands)
=
A; = Joy's own monthly advertising expenditures (thousands)
One of the outlets has the following conditions: P = 1.50, I = 10, T = 60, A₁ = 15, A; = 10
1. Estimate the number of cups served per week by this outlet. Also determine the outlet's
demand curve.
2. What would be the effect of a $5,000 increase in the competitor's advertising expenditure?
Illustrate the effect on the outlet's demand curve.
3. What would Joy's advertising expenditure have to be to counteract this effect?
The Compute Company store has been selling its special word processing software, Aceword, during
the last 10 months. Monthly sales and the price for Aceword are shown in the following table. Also
shown are the prices for a competitive software, Goodwrite, and estimates of monthly family income.
Calculate the appropriate elasticities, keeping in mind that you can calculate an elasticity measure
only when all other factors do not change (using Excel). For example, price elasticities, months
1-2.
Month
Price
Aceword
Quantity
Aceword
Family
Income
Price
Goodwrite
1
$120
200
$4,000
$130
21
120
210
4,000
145
3
120
220
4,200
145
4
110
240
4,200
145
90
5
115
230
4,200
145
6
115
215
4,200
125
10
7899
115
220
4,400
125
105
230
4,400
125
105
235
4,600
125
105
220
4,600
115
Chapter 12 Solutions
Principles of Microeconomics, 7th Edition (MindTap Course List)
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