ECP 6705 – First Problem Set Fall, 2014 Name or Names: (if a group of two) 1. Write a memo to UWF COB Dean Tim O’Keefe explaining why you believe offering a tuition increase for the next semester MBA students will increase total revenue (assume that he has heard of elasticity, but is no expert on the subject). 2. Mentone Cabins recently reduced price by 20 percent and saw volume increase by 10 percent. Should the owners reduce price further? 3. The DMC short-run average cost function in 2012 was (AC = 3 + 4Q) a. Give the short-run total cost function b. Derive the marginal cost function c. If the current price is $3, is the firm making profit or loss? …show more content…
b. Do you think that the demand curve for cigarettes is the same now as it was in 1918? If not, describe in detail several factors that have shifted the demand curve and whether each has shifted it to the left or right. 12. What is a freemium business model? Google the term and give an example of a company. Explain how revenue is derived in this model (e.g., the two common revenue sources) for your example company. 13. Suppose the following table illustrates total value to the widget customer Units Purchased Total Value for all Units to the Customer (in $) 0 0 1 10 2 15 3 18 4 20 5 21 a. If you set P=4.9, how many units will you sell? b. Why will you fail to sell 4 units (even though average utility > price)? 14. Suppose QT = 150 (8 – PT) and QL = 180 (5 – PL) and MC=1.2 for each market. Calculate the optimal PT and PL. 15. If the price elasticity of demand for transit systems is -0.3, by what percentage will a new 20% price increase affect transit
"Use of e-cigarettes has grown quickly in the last decade, with U.S. sales expected to reach $4.1 billion in 2016." Electronic cigarettes are substitutes to cigarettes. As the price of one good increases, the quantity demanded of that good, and thus the quantity demanded of the substitute good would increase. This is evident on the graph below. As the tax causes a price increase from P1 to P2,the quantity demanded of e-cigarettes also increases from Q1 to Q2. Cigarettes and e-cigarettes would therefore have a positive cross-price elasticity of demand which would be small in the short term but large in the long term. It is extremely difficult for people to switch any addictive habit. However, over the long term, citizens would have time to adapt and switch to electronic
According to our analysis, So , c) is a betterthe optimal choice whichchoice, which confirmed our aggressive machine buying strategy since Day 135. And on Day 149, and Day 170, we immediately bought machine for station 2 and 1 again when the stationsit becomes bottle neck or when lead time is more than 0.28 which caused revenue decreased to $1,200.
This is a report which has been created to introduce new childcare practitioners to safeguarding within a childcare setting. This will help new practitioners to understand current legislations within the United Kingdom.
Use the space below to compose a journal of 250-500 words on nationalism by answering the following:
The maximum price someone is willing to pay for an additional unit is the marginal
b. Again analyzing his past data, Larry does a runs test. He finds the following results.
The large potential audience is the most important consideration when considering a freemium revenue model. In order for a business to grow, it should attract as many people as possible. These users will later on be the ones that will pay for the services the business offers. In order to attract customers, the service that the business
1) Increasing commercial prices to $1,000 per hour believing that demand would be reduced by 30%
2. The quantity of peanuts supplied increased from 40 tons per week to 60 tons per week when the price of peanuts increased from $4 per ton to $5 per ton. The price elasticity of supply for peanuts over this price range is
The estimate of total potential market for heater/blower unit is 2737 units and 2737000 units for blankets (see exhibit 1). The direct cost of the heater/blower unit would be $380 and $0.85 per blanket. The initial investment, $500,000, for this system would cover the fixed cost of the company during first year of operation. Based on this basic information and other considerations, the company has to determine its pricing strategy for both
II. When price falls from 4 pounds to 3 pounds the demand for travel increases to 80,000 units- At the original market price of 4 pounds the demand for travel was 60,000 units generating revenue of 240,000 pounds. When the price is reduced to 3 pounds the resulting demand is 80,000 units and this also generates income of 240,000 pounds. When market price changes and the resulting revenue remains the same it can be said that price elasticity of demand is unitary in
The semi-annual compounded interest rate is 5.2% (a six-month discount rate of 5.2/2 = 2.6%). (15 points)
Problem #2.” (To make your life easier, optimal stocking quantity, Q, is computed by the
Freemium business model is the new ‘hit’ business model of the moment as it is revolutionizing today’s industries. It is helping making the world a better in a way that it allows people to access tools and services that they would never be able to afford before.
Mr. James McBride is under tremendous pressure to prove his mettle. He has been appointed as the General Manager of the Ritz Carlton which will be shortly opening at Washington D.C. the major challenge he