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 price
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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_forwardThe ABC Computer Company spends a lot of money on advertising designed to convince you that its personal computers are superior to all other personal computers. If the ABC Company is successful, A) the demand for ABC personal computers and the demand for other firms' personal computers will become more price elastic. B) the demand for ABC personal computers will become less price elastic but the demand for other firms' personal computers will become more price elastic. C) the demand for ABC personal computers will become more price elastic but the demand for other firms' personal computers will become less price elastic. D) the demand for ABC personal computers and the demand for other firms' personal computers will become less price elastic.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_forward
- Cikli is the manager of a firm that receives a revenue of RM3000 per month from product X and RM7000 per month from product Y. The price elasticity of demand for product X is -2.5 when original quantity (Q) for X and Y are 150 and 175 units, respectively and the cross price elasticity of demand between product X and Y is 1.1. If Cikli increases the price of good X by 1%. a. How much will Cikli's total revenue change for product X? b. How much is Cikli's new total revenue for both of the products? c. Plot a graph for product X and another for product Y, showing the before and after change in price. d. Give an appropriate example for each product. 2. Zulaikha and Ker Xin went to a shop to buy rice. Zulaikha wanted to buy 10kg of rice and Ker Xin wanted to buy RM20 worth of rice. Find the price elasticity of demand for each of them. 3. Nadzif always spends one-fifth of his income on food. Calculate his income elasticity of demand (use the midpoint formula).arrow_forwardYou are the manager of a firm that receives revenues of $20,000 per year from product Xand $80,000 per year from product Y. The own price elasticity of demand for product X is -3, and the cross-price elasticity of demand between product Y and Xis -1.6. How much will your firm's total revenues (revenues from both products) change if you increase the price of good X by 2 percent?arrow_forwardSuppose a firm produces two products, X and Y. The firm earns revenues from X equal to $70,000 and revenues from Y equal to $60,000. The own price elasticity of demand for Xis-1.5 and the cross-price elasticity of demand between X and Y is-0.80, If the firm decreases the price of product X by 1%, the change in total revenues will be $arrow_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_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_forwardYou are the manager of a firm that receives revenues of $40,000 per year from product X and $70,000 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 Y and X is 1.6. How much will your firm's total revenues (revenues from both products) change if you increase the price of good X by 1 percent? Instructions: Enter your response rounded to the nearest dollar. If you are entering a negative number, be sure to use a (-) sign. $arrow_forward
- Can you think of an industry (or product) with near infinite elasticity of supply in the short term? That is, what is an industry that could increase Qs almost without limit in response to an increase in the price?arrow_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_forwardSuppose that the Blinn College Deli is currently selling 500 chef salads per day when the price is $5. Suppose that the own-price elasticity of demand for chef salads is -0.8. As the Deli manager you decide to lower the price by $0.50. Which of the following is most likely to happen? Chef salad sales will fall by approximately 8% and total revenue will be lower. Chef salad sales will rise by approximately 8% and total revenue will be higher. Chef salad sales will fall by approximately 8% and total revenue will be higher. Chef salad sales will rise by approximately 8% and total revenue will be lower.arrow_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