Microeconomics
Microeconomics
11th Edition
ISBN: 9781260507041
Author: Colander, David
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 6, Problem 10QE

A newspaper recently lowered its price from $5.00 to $3.00. As it did, the number of newspapers sold increased from 240,000 to 280,000. (LO6-3)

  1. a. What was the newspaper’s elasticity of demand?
  2. b. Given that elasticity, did it make sense for the newspaper to lower its price?
  3. c. What would your answer be if much of the firm’s revenue came from advertising and the higher the circulation, the more it could charge for advertising?
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At the 8:10 café, there are equal numbers of two types of customers with the following values. The café owner cannot distinguish between the two types of students because many students without early classes arrive early anyway (that is she cannot price discriminate).     Students with early classes Students without early classes Coffee 70 60 Banana 50 100     The MC of coffee is 10.  The MC of a banana is 40.  Is bundling more profitable than selling separately?  HINT:  if you sell the bundle, can you make more by offering coffee separately? If so, what price should be charged for the bundle? (Show calculations)
Your marketing department has identified the following customer demographics in the following table.  Construct a demand curve and determine the profit maximizing price as well as the expected profit if MC=$1.  The number of customers in the target population is 10,000. Use the following demand data: Group Value Frequency Baby boomers $5 20% Generation X $4 10% Generation Y $3 10% `Tweeners $2 10% Seniors $2 10% Others $0 40%
Your marketing department has identified the following customer demographics in the following table.  Construct a demand curve and determine the profit maximizing price as well as the expected profit if MC=$1.  The number of customers in the target population is 10,000.   Group Value Frequency Baby boomers $5 20% Generation X $4 10% Generation Y $3 10% `Tweeners $2 10% Seniors $2 10% Others $0 40%   ur marketing department has identified the following customer demographics in the following table.  Construct a demand curve and determine the profit maximizing price as well as the expected profit if MC=$1.  The number of customers in the target population is 10,000.
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