MANAGERIAL ECONOMICS
5th Edition
ISBN: 9781337106658
Author: FROEB
Publisher: CENGAGE L
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Question
Chapter 12, Problem 4MC
To determine
Acquiring complementary good.
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Students have asked these similar questions
Discuss the scenarios below. Please treat each scenario separately.
(i)
You are the manager of a local restaurant. You notice that when you
lower the price of your meals, your total revenue rises. What conclusion
can you draw about the demand for your restaurant's meal?
(ii)
For a car manufacturing industry, why does the elasticity of supply
generally increase as more time passes after a price change?
(iii)
Over 20 years period, tuition fees at a university have increased by 60%.
At the same time, the number of students enrolled for the courses at the
same university had increased from 20,000 to over 32,000. Based on the
Law of demand, when a price of a product increases the demand for the
same product will reduce. Based on the scenario of the university, do
you think the law of demand is untrue? Please explain your conclusion
using appropriate graphs.
Solve all this question......you will not solve all questions then I will give you down?? upvote......
Stiller
Explanation:
Q4. a) Give your own example (think about your own tastes&preferences, i.e., you cannot use
examples from the textbook) of a product that your demand is elastic. Assume that the price of this
product rises. What happens to total revenue of the producer? Explain why.
Product you choose:
TR declines or increases:
Explanation:
b) Give your own example (think about your own tastes&preferences, i.e., you cannot use examples
from the textbook) of a product that your demand is elastic. Assume that the price of this product
rises. What happens to total revenue of the producer? Explain why.
Product you choose:
TR declines or increases:
Explanation:
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Similar questions
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- If a rise in thearrow_forwardThere are 1000 consumers in the market of good A, each has an identical demand curve for this good. The price of one unit of good A is $P. At a given price the market demand is: A. More elastic than the individual demand curve B. less elastic than the individual demand curve C. as elastic as the individual demand curve D. depending on P, all above can happenarrow_forwardGive typing answer with explanation and conclusionarrow_forward
- The Future Flight Corporation manufactures a variety of Frisbees selling for $2.98 each. Sales have averaged 10,000 units per month during the last year. Recently Future Flight's closest competitor, Soaring Free Company, cut its prices on similar Frisbees from $3.49 to $2.59. Future Flight noticed that its sales declined to 8,000 units per month after the price cut. a. What is the arc cross elasticity of demand between Future Flight's and Soaring Free's Frisbees? b. If Future Flight knows the arc price elasticity of demand for its Frisbees is -2.2, what price would they have to charge to obtain the same level of sales as before Soaring Free's price cut?arrow_forward1. Given the supply function P = Q2 - 6Qs +15. a) Find the expression for the elasticity of the supply in terms of Q. b) Find the level for which the supply is unit elastic. c) Find the elasticity at Q= 2 and discuss. d) Find the percentage change in supply due to 10% decrease in price at current level of output of 2.arrow_forwardNonearrow_forward
- 2) If a firm lowered the price of the product it sells and found that total revenue did not change, then the demand for its product is A) relatively elastic. B) unit elastic. C) perfectly inelastic. D) perfectly elastic.arrow_forwardSuppose that the demand for soft drinks is price elastic and the supply is price inelastic. If the government imposes a sales tax on soft drinks, which of the following will occur in the short run? (A) The tax burden will fall equally on both consumers and producers. (B) The tax burden will fall more on producers. (C) The tax burden will fall more on consumers. (D) The percentage increase in the price of soft drinks will be greater than the percentage increase in the quantity demanded. (E) The percentage decrease in total revenue will be greater than the percentage decrease in the quantity demanded.arrow_forwardQUESTION 1 Firms A, B, and C were all selling 1,000 cups of coffee per day at $3.50 per cup, but in the following week they all changed their prices. This gave their managers some information about the elasticity of demand in their local market, though they have to be careful to recognize that other factors might also have affected demand. The table below shows the change in sales as a result of their new prices; they made no other changes. Complete the table by calculating the revenue, cost of goods sold (COGS), and gross margin for each firm. Firm Baseline A B C Price per Cup $3.50 $3.00 $4.00 $2.50 Cups Sold 1,000 1,140 830 1,500 Revenue $3,500 $0 0 0 COGS @ $0.35 per Cup $350 $0 $0 $0 Gross Margin $3,150 $0 $0 $0 Coffee prices are going up, and Firm B is trying to decide whether to pass on to customers a cost increase of 10¢ per cup-to $0.45 per cup. What will be their new gross margin if they don't pass on the cost increase and demand remains unchanged? $ 0 What will be their new…arrow_forward
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