You are the manager of a firm that receives revenues of $40,000 per year from product X and $90,000 per year from product Y. The own
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- Your firm’s research department has estimated the income elasticity of demand for non fed ground beef to be -1.94. You have just read in the Wall Street Journal that due to an upturn in the economy, consumer incomes are expected to rise by 10 percent over the next three years. As a manager of a meat-processing plant, how will this forecast affect your purchases of non fed cattle?arrow_forwardYou are the manager of a firm that receives revenues of $60,000 per year from product X and $80,000 per year from product Y. The own price elasticity of demand for product X is -1.5, and the cross- price elasticity of demand between product Yand X is -1.4. How much will your firm's total revenues (revenues from both products) change if you increase the price of good X by 2 percent? Instructions: Enter your response rounded to the nearest dollar. Use a negative sign (-) if applicable. %24arrow_forwardYou would like to control the total consumption of soft drink up to 100 bottles per year. The current two brands you drink are Pepsi and Coke. The current demand, price, elasticity, and minimum demand for Pepsi and Coke are given in below. In addition, you would like to keep equal or more demand from Pepsi due to brand loyalty. Assuming linear demand curves, what are the best price for Pepsi and Coke that can minimize your total payment? Elasticity Current price Demand Minimum demand Keep Pepsi income > = 60% of total payment Pepsi 2 2 300 20 Coke 1 3.5 220 25arrow_forward
- You manage a movie theater that can handle up to 8,000 patrons per week. The current demand, price, and elasticity for ticket sales, popcorn, soda, and candy are given in below. The theater keeps 45 percent of ticket revenues. Unit cost per ticket, popcorn sales, candy sales, and soda sales are also given. Assuming linear demand curves, how can the theater maximize profits? Demand for foods is the fraction of patrons who purchase the given food. Elasticity Current Price Demand Cost Ticket 3 8 3000 0 Popcorn 1.3 3.5 0.5 0.4 Soda 1.5 3 0.6 0.6 Candy 2.5 2.5 0.2 1arrow_forwardSolve it earlyarrow_forwardYou own a bakery and shop that makes and sells gourmet doggie treats. You have done market research and you know with certainty that your product is a normal good, not an inferior good. The current demand function for your gourmet doggie treats is: QD = 480 -6*P which of course means the equation for your current demand curve is: P = 80 -(1/6)*Q You are opening a new shop in a new part of town, and you know that incomes in that part of town are much lower than incomes are where your shop is now. Which of the following is most likely the demand curve in your new shop? Multiple Choice O P=68- (1/6)*Q P = 102 - (1/6)*Q P=92-(1/6)*Q P = 88 - (1/6)*Qarrow_forward
- A firm manufactures high priced gold plated wrist watches. The firm is considering lowering the price of its watches from the current $1000 per unit to $700 per unit. The firm currently sells 6000 units per year. The firm's staff economist believes the price elasticity of demand to be -3 over this price range. If the firm lowers the price, will the total revenue increase, decrease or remain unchanged? Why? If it lowers the price, what will be the new level of quantity demanded? Of new total revenue? Would you suggest the firm to offer further price discount? Why? And Why not?arrow_forwardPractice #6 Francine is a a dental floss tycoon living in Montana. She faces the following demand curve for her product: Price ( in $/unit) Quantity demanded 2.50 1000 2.20 2000 1.90 3000 1.60 4000 1.30 5000 1.00 6000 .70 7000 .40 8000 Francine has been told by her brother, who is currently taking a marketing class, that if she lowers her price by one increment(for example; changing price from .70 to .40, she will capture market share and increase total revenue. All of her advisors within the company have assured Francine that her brother's advice may be correct, BUT the above demand curve will not change. Assume that Francine knows the above demand curve will not change and is also considering her brother's advice. The prices can only change in…arrow_forwardSuppose Samsunk sells her tablet computers at a price of $3,000. Estimates show that the manufacturing cost of each tablet computer is constant at $900. Calculate the Lerner Index of Samsunk on her tablet computers and the implied demand elasticity for her tablet computers.arrow_forward
- Help me fast so that I will give Upvote.arrow_forwardExplain it earlyarrow_forwardDescribe whether Starbucks' product(s) would be expected to have an elastic demand or inelastic demand. Be explicit. Do not just state the demand for this company’s product is elastic (or inelastic). Justify your answer. For example, if I have selected Ford company, I could argue that the demand for Ford cars is price elastic because there are many other substitutes which buyers can turn to if Ford increases the prices of its carsarrow_forward
- Managerial Economics: Applications, Strategies an...EconomicsISBN:9781305506381Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. HarrisPublisher:Cengage Learning
- Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning