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 2, Problem 9MC
To determine
Calculate the bottom line
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Show the calculation. How to get 0.008?
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Chapter 2 Solutions
Managerial Economics: A Problem Solving Approach
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- A buyer's willingness to pay for a good is the that good. It measures how much the the good. buyer maximum demand for, is willing to pay for price of, values maximum amount the buyer is willing to pay for, values minimum amount the buyer is willing to pay for, needs actual amount the buyer pays for, valuesarrow_forwardThe answer should be typed.arrow_forwardQuestion 14 a). The demand for good A is written as follows: Q₁ = 300-3PA +2PB-0.2Y where Q₁ is the quantity demanded of good A, P, is the price of good A in dollars, P₁ is the price of good B in dollars, and Y is the consumer's income in dollars. If P₁ = $10 and P₂ = $15 (i) Calculate the quantity of good A demanded when Y = $500 and when Y = $1000 (ii) Calculate the income elasticity of demand for good A. According to your answer, is the good a normal or an inferior one? b). Consider the case where the manager of Asylum finds that customers fell from 250 to 50 on Sunday nights when the price of admission was increased from $200 to $300. Calculate the price elasticity of demand. Comment on the demand for night activity.arrow_forward
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- Multiple Choice - YED 1. Calculate the YED for good A if household incomes rise from $15,000 to $15,750 and quantity demanded rises from 200,000 units to 204,000. A. +4.0 B. +0.4 C.-4.0 D. -0.4 2. Calculate the change in household income if the quantity demanded for good B falls by 6% and its YED is -1.2. A -0.5 B.-5.0 C. +5.0 D. 0.5 3. Which of the following is not true about YED? A. Inferior goods have a YED of 0 B. Normal goods have a positive YED C. Luxury goods have a YED of greater than 1 D. Necessity goods have a YED of between 0 and 1 4. Which of the following goods is most likely to have a negative YED? A. Designer handbag B. Prestige car C. Tinned vegetables D. Electricity 400V 5. If incomes fall in a recession, what would you expect a chain of restaurants with a YED of +1.6 to do? A. Set up a contract to order more tables and chairs B. Decide to expand the number of their outlets C. Hire more staff D. Negotiate with their suppliers to reduce food costsarrow_forwardExit A 5 tax on sugar-sweetened beverages currently generates $400,000 in revenue per day. If the tax increases to 8%, the revenue the tax generates will drop to $370,000. This tells us that in this range of tax rates, the effect outweighs the effect. Multiple Choice quantity, price O quantity, Income price; quantity price, Incomearrow_forwardj and l onlyarrow_forward
- Suppose a consumer views a red pencil as a perfect substitute for a blue pencil. Suppose the supply of a red pencil has a positive slope. Suppose the prices of red and blue pencils are, pr and PB. What would happen if the government taxed only red pencils. What would happen if there were only red pencils? What would happen if there were only blue pencils?arrow_forwardQ1arrow_forwardThe value of a price-distorting subsidy for a three-bedroom apartment is $100 per month. This means that the person choosing to live in an apartment of that size would have to pay an extra $100 per month at the market rent. Then it follows that: A.that person would be just as well off if she received a cash subsidy of less than $100 per month. B.that person would be better off if she received a cash subsidy of $100 per month. C.that person would be better off if she received a cash subsidy of $100 per month, or that person would be just as well off if she received a cash subsidy of less than $100 per month D.that person would be worse off if she received a cash subsidy of $100 per month.arrow_forward
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