The Camera Shop sells two popular models of digital SLR cameras. The sales of these products are not independent; if the price of one increases, the sales of the other increases. In economics, these two camera models are called substitutable products. The store wish o establish a pricing policy to maximize revenue from these products. A study of price and sales data shows the following relationships between the quantity sold (N) and price (P) of each model. NA = 165 -0.7PA +0.45PB Ng = 322 +0.08PA - 0.6PB (a) Construct a model for the total revenue and implement it on a spreadsheet. What is the profit (in dollars) predicted by your model when the price of model A is PA = $260 and the price of model B is Pg = $320. $ 81276 ✓ (b) Develop a two-way data table to estimate the optimal prices for each product in order to maximize the total revenue. Vary each price from $250 to $500 in increments of $10. P₁ = 300 X PR =

The Camera Shop sells two popular models of digital SLR cameras. The sales of these products are not independent; if the price of one increases, the sales of the other increases. In economics, these two camera models are called substitutable products. The store wish o establish a pricing policy to maximize revenue from these products. A study of price and sales data shows the following relationships between the quantity sold (N) and price (P) of each model. NA = 165 -0.7PA +0.45PB Ng = 322 +0.08PA - 0.6PB (a) Construct a model for the total revenue and implement it on a spreadsheet. What is the profit (in dollars) predicted by your model when the price of model A is PA = $260 and the price of model B is Pg = $320. $ 81276 ✓ (b) Develop a two-way data table to estimate the optimal prices for each product in order to maximize the total revenue. Vary each price from $250 to $500 in increments of $10. P₁ = 300 X PR =

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter12: More Realistic And Complex Pricing

Section: Chapter Questions

Problem 9MC: After running a promotional campaign, the owners of a local hardware store decided to decrease the...

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The Camera Shop sells two popular models of digital SLR cameras. The sales of these products are not independent of each other, but rather if the price of one increase, the sales of the other will increase. In economics, these two camera models are called substitutable products. The store wishes to establish a pricing policy to maximize revenue from these products. A study of price and sales data shows the following relationships between the quantity sold (N) and prices (P) of each model:
The MacDonald sells two popular packages of breakfast all day long: Mac A and Mac B. The sales of these products are not independent of each other (in economics, we call these substitutable products, because if the price of one increases, sales of the other will increase). The store wishes to establish a pricing policy to maximize revenue from these products. A study of price and sales data shows the following relationships between the quantity sold (Q) and prices (P ) of each model: QA = 20 - 0.62PA + 0.3PBQB = 29 + 0.1PA - 0.6PBi . Construct a model for the total revenue and implement it on a spreadsheet. b. Develop a two-way data table to estimate the optimal prices for each product in order to maximize the total revenue. c. Use "Solver" to find the optimal prices.
The Camera Shop sells two popular models of digital SLR cameras (Camera A Price: $240, Camera B Price: $300). The sales of these products are not independent of each other, but rather if the price of one increase, the sales of the other will increase. In economics, these two camera models are called substitutable products. The store wishes to establish a pricing policy to maximize revenue from these products. A study of price and sales data shows the following relationships between the quantity sold (N) and prices (P) of each model: NA = 195 - 0.5PA + 0.35PB NB = 300 + 0.06PA - 0.5PB Construct a model for the total revenue and implement it on a spreadsheet. Develop a two-way data table to estimate the optimal prices for each product in order to maximize the total revenue. Vary each price from $250 to $500 in increments of $10. Max revenue occurs at Camera A price of $ - Max revenue occurs at Camera B price of $ -
The Pear company sells a smart phone for $250. Its sales have averaged 8,000 units permonth over the last year. Recently, its closest competitor Banana company reduced the priceof its smart phone from $350 to $300. As a result, Pear’s sales declined by 1,500 units permonth.(a) What is the cross price elasticity of demand between the Pear and Banana smart phone?Use the averaging formula. What does this indicate about the relationship between the twoproducts?(b) If the Pear company knows that the price elasticity of demand for its phone is -1.5, whatprice would the Pear company have to charge to sell the same number of units as it did beforethe Banana company price cut? Assume that Banana company holds its price of its phoneconstant at $300. Use the averaging formula.
Investigating the demand for textile in a country X, a researcher observed that the demand for textiles tend to rise by 1.5 per cent with one per cent decrease in the prices of textiles; with the rise in one per cent of per capita GDP, the demand for textiles rise by 0.45 per cent and when food prices increased by one per cent, the demand for textiles contracts by 0.93 per cent. (a) Identify the type of demand elasticities in this case and define them. (b) Which type of elasticity the textile mills should consider significant for business development? (c) How much rise in sales is expected during a festival season by offering 20 per cent discount by textile mills showrooms?
The quantity of hot dogs buns demanded at a price of $1.59 increased from 100units to 130unite during the week that hot dogs went on sales for $1.89 rather than the regular price of $2.59. (a) what data points (P1 Q1) (P1 Q2) would you use to calculate the cross elasticity of demand for hot dogs and buns? (b) would the cross elasticity of demand be positive, zero or negative? What does this represent in economics terms? (c) the next time hot dogs went on sales, the price of buns was increased to $1.79 and only 120 buns was sold. Was this a good business decision? Why/why not?
Suppose that when the price of peanut butter falls from $3 to $2 per jar, the quantity of jelly purchased falls from 15 million jars to 10 million jars. The cross-price elasticity of demand between peanut butter and jelly using the mid-point method. .................... Therefore, the goods are........ (A) -1; complements (B) 1; substitutes Ⓒ1; complements D) -1; substitutes
The Camera Shop sells two popular models of digital SLR cameras (Camera A Price: 230, Camera B Price: 310). The sales of these products are not independent of each other, but rather if the price of one increase, the sales of the other will increase. In economics, these two camera models are called substitutable products. The store wishes to establish a pricing policy to maximize revenue from these products. A study of price and sales data shows the following relationships between the quantity sold (N) and prices (P) of each model: NA = 192 - 0.5PA + 0.25PB NB = 305 + 0.08PA - 0.6PB Construct a model for the total revenue and implement it on a spreadsheet. Develop a two-way data table to estimate the optimal prices for each product in order to maximize the total revenue. Vary each price from $250 to $500 in increments of $10. Max profit occurs at Camera A price of $______. Max profit occurs at Camera B price of $______.
A sporting goods store has estimated the demand for a popular brand of running shoes as given in the table below. Price per unit (OMR) Shoe sales per week 60 100 50 200 40 300 30 400 20 500 10 600 Graphically present the table to get a demand curve. If the store charges a price of 50 OMR, then increases this price to 60 OMR, estimate price elasticity of demand. Analyze the total revenue before and after the price change.
The Camera Shop sells two popular models of digital SLR cameras. The sales of these products are not independent; if the price of one increases, the sales of the other increases. In economics, these two camera models are called substitutable products. The store wishes to establish a pricing policy to maximize revenue from these products. A study of price and sales data shows the following relationships between the quantity sold (N) and price (P) of each model. NA = 185 - 0.7PA + 0.55P, Ng = 282 + 0.08PA - 0.7PB (a) Construct a model for the total revenue and implement it on a spreadsheet. What is the profit (in dollars) predicted by your model when the price of model A is Pa = $230 and the price of model B is Pa = $320. $ 93318 (b) Develop a two-way data table to estimate the optimal prices for each product in order to maximize the total revenue. Vary each price from $250 to $500 in increments of $10. PA = 270 PB = 390
Suppose the demand function for product X is estimated by the equation: QDX= -2PX + 0,5PY - 0,2PZ + 1,2I. In there:QDX is the quantity demanded of product XPX is the price of product XPY is the price of product YPZ is the price of product ZI is the average income of consumersa/ Please make an argument to determine the relationship between two products X and Y, X and Z.b/ Please make an argument to determine whether product X is an ordinary good or a low-end good
Shell has over 13,000 gas stations in the United States. In addition to gasoline, the gas stations also sell convenience items, such as snacks, non-alcoholic beverages, wine, beer, and hot food. Suppose you work for a gas station and your boss asks you to develop a pricing strategy for bottled local wine. The demand function is ? = 100 – 4?, where ? is the monthly quantity demanded of the bottled wine and ? is the price of the bottled wine. The marginal cost per bottle of wine is $5. Complete the following tasks: 1) (Calculating) In the worksheet “Q2 Calculations” of the provided Excel file, enter formulas in columns B-D to calculate Q (quantity demanded), MC (marginal cost), and MR (marginal revenue). Please round your results to one decimal place. Note that the inverse demand function is ? = 25 − 0.25? and that the MR function can be derived from the inverse demand function using the formula introduced in Module 5. You may find it helpful to review the Excel file for Chapter 11.