Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN: 9781285165875
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 27, Problem 1QR
To determine
Calculation of present value of money.
Expert Solution & Answer
Explanation of Solution
The present value of $200 can be calculated as follows:
The present value is $101.67.
The present value of $300 can be calculated as follows:
The present value is $77.53.
Economics Concept Introduction
Concept introduction:
Present value: Thepresent value refers to the today’s value of the future amount that adjusted with the existing interest rate.
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To determine the benefits of extending hours of operation for a food truck business, the couple should calculate additional revenue, break-even analysis, market demand, and raise prices. They should analyze competitors' prices and customer sensitivity to price changes, determine price elasticity, and test the strategy by implementing a slight price increase and monitoring sales closely.
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Respond to following post.
You can charge higher prices if the parents think these are valuable by providing different services such as extended hours, healthy lunches, and smaller staff-to-child ratios. But pushing for prices much higher won’t make sense unless parents think the added value is worth the price hike. You should research your local parents to find out what they want.
If you want your business to be profitable, then focus on your strengths, do great work and have a reputation. Promote your special products and keep your prices low.
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Chapter 27 Solutions
Principles of Economics, 7th Edition (MindTap Course List)
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